A Conversation with IPS’s Helen Flannery and OSU’s Brian Mittendorf (Part 2 of 2)

Helen Flannery is an associate fellow at the Institute for Policy Research (IPS), for which her research and writing focuses on charity reform. Prior to coming to IPS, she worked for nonprofit clients at both the Target Analytics and ROI Solutions software-development firms.

Brian Mittendorf is the H.P. Wolfe Chair in Accounting at The Ohio State University’s Max M. Fisher College of Business. He specializes in nonprofit accounting and teaches courses on financial statements for nonprofit and governmental organizations, among other things. Prior to coming to Fisher College, he was an associate professor at the Yale School of Management.

Flannery and Mittendorf often collaborate on research and co-author articles about nonprofit finance—most recently including the fascinating “Charitable Objectives or Donor Benefits? What Sponsor Language Reveals about Donor-Advised Fund Priorities and Resource Flows,” forthcoming in Nonprofit and Voluntary Sector Quarterly. For the article, acknowledging that donor-advised funds (DAFs) “are not a homogenous monolith, and seeking to understand what distinguishes sponsoring organizations from each other,” on the basis of DAF sponsors’ own specific language and descriptions of their offerings and activities, Flannery and Mittendorf “develop a measure of DAF sponsor priorities and examine if it is predictive of behavior,” as they put it.

Highlighting one interpretation of their findings, Flannery and Mittendorf continue, because DAFs sponsored by “community foundations tend to have missions that are firmly rooted in specific localities, sponsors and donors are unified around shared expectations and priorities.” On the other hand, DAFs with

[n]ational sponsors, which have no locally unifying missions, may instead attract different donors depending on how much they emphasize extrinsic benefits—and this, in turn, may affect both the types of contributions they receive and the speed with which they disburse grants. Consistent with this notion, we find that national sponsors who put a greater emphasis on donor benefits in their website language have greater assets, are more apt to receive donations that are more tax favored, and are more apt to be slow in distributing grants than those national sponsors whose language emphasizes charitable impact.

Flannery and Mittendorf believe their “findings may also help policy makers identify circumstances where DAF sponsors warrant additional scrutiny,” they add in the article. “That is, even if the average sponsor exhibits characteristics that suggest limited intervention, observable and predictable variation across sponsors may justify oversight of or guardrails placed on at least some of them, particularly as it pertains to their payout practices.”

Previous, also-informative articles by the two include last year’s “Reshaping Charity Channels: How Assets Flow into and out of Donor-Advised Funds” and “Are Donor-Advised Funds Facilitating Opaque Giving to Politically Engaged Charities?”

The approachable and good-natured co-authors were kind enough to join me for a recorded conversation earlier this month. In the first part of our discussion, which is here, we talk about their research and writing on donor-advised funds (DAFs) in general and why they’re controversial—along with different kinds of DAF sponsors, and their different focuses and emphases, in particular.

The less than 18-minute, edited video below is the second part, during we discuss ways to think about any potential legal and regulatory DAF reforms.

“We didn’t prescribe anything” in the “Charitable Objectives or Donor Benefits?” article, Flannery tells me.

The general idea is that instead of classifying donor-advised fund sponsors by just by organizational type, we would look at classifying them by how they behave. You could look at things like how they present themselves like we did, and you can look at asset growth, you can look at payout, you could look at what kind of contributions they get. …

One problem with setting good policy right now is that … we’re lumping sponsors together with a really broad brush, and their financial behavior might be very different and might warrant different approaches.

According to Mittendorf, “There is a lot of focus on the payout speed for DAFs,” but

I think there is a reason to step back and ask, like, what is the intent of the law? You know, private foundations are treated differently than public charities for a variety of reasons, and if DAFs are essentially allowing de facto private foundations without the baggage that comes with running a private foundation, then it can’t seem like Congress’s intent is fully fulfilled.

He continues, “These national sponsors—particularly the ones who are very donor-benefit-focused—get way more” tax benefits than private foundations, “so those are tax expenditures for the government that would not have been to that scale if that money had been given to a private foundation. … Giving to a public charity is much more tax-subsidized than giving to a private foundation.

“If they’re behaving like private foundations,” Mittendorf says,

that’s the other piece that Congress could look at. I don’t know the answer to it, but I think in many ways, our research kind of keeps going to: if Congress’ intent is to allow private foundations or allow people, donors to behave as if they run a private foundation without having to deal with all of the added requirements that private foundations have to deal with, then they’re missing something there.

And it could be that they take the attitude of, you know, it’s generated charity that we didn’t realize will be generated, and we’re willing to live with that—but at least that explicit conversation needs to be had.

Both Flannery and Mittendorf express support for more information being available about DAFs at the account-specific level, which they each thought could easily be done by the existing sponsors and without necessarily jeopardizing account-holders’ privacy. There wouldn’t be a need “to identify it by name. You could identify it by account ID,” Flannery says. “That would let you see, are there some accounts that aren’t paying out anything at all? Are there some accounts that are paying out a lot that are kind of providing statistical cover?

“I think we could learn a lot from if we knew about grants and payout on the individual-account level for donor-advised funds,” she later adds. “It would answer a lot of the questions we have about how much are these DAFs being warehouses. How much are they moving money? Is it a small set of the accounts that are sort of behaving badly, or is it a big range of them?”

Account-level transparency “might alleviate some of the concerns either because, hey, the problem wasn’t that big in the first place, or we know requiring people to disclose things gets people to change their behavior,” Mittendorf says, “so requiring more public disclosure might be an intermediate angle.”

More generally, whether any reform would need to be statutory or merely regulatory, Flannery says:

In my opinion, to be really effective, it would have to be statutory first and then it would have to be backed up by complementary and effective regulation, and that regulation would have to be enforced. And there’d have to be active oversight to make sure that regulation was working. … At this point, I feel like almost anything is better than nothing.

There have been recent attempts to make statutory performs …. There have been recent attempts to make regulatory reforms …. Both types of aims have been fought hard by DAF sponsors and sometimes the financial industry that has a vested interest in the status quo

I would also say that we are not just dependent on federal level enforcement. There’s also ways states can enforce rules about DAFs.

This article first appeared in the Giving Review on May 22, 2025.