Deploying Donor-Advised Funds for Durable Impact

(Previously published on Medium)

In 1973, two scholars, Horst Rittel and Melvin Webber, coined the term ‘wicked problems’ to describe complex social issues that are resistant to change. Problems like healthcare, extreme poverty, and education are interconnected, unwieldy in scope, and self-perpetuating. Each attempted solution risks spawning new, more complex iterations of the original problem.¹

Wicked problems require complex approaches that can adjust to shifting landscapes. They demand strategies that evolve alongside societal, technological, and environmental changes. This dynamic will increasingly define emerging spaces like artificial intelligence and the clean energy transfer. Addressing these problems will require strategies that move faster than the problems themselves.

For decades, governments, nonprofits, philanthropists, and private businesses, operated in parallel, each addressing sections of complex problems through isolated efforts. Coordination was rare. Impact, by default, remained siloed.

In 2011, John Kania and Mark Kramer introduced the concept of ‘collective impact’ in the Stanford Social Innovation Review. Collective Impact offered a framework to address wicked problems through coordinated, multi-sector collaboration.² Unlike previous isolationist approaches, the framework called on stakeholders from government, nonprofits, philanthropy, and business to align resources toward collective goals. This approach reframed problem-solving from fragmented efforts to integrated, scalable solutions.

Similar efforts have been formalized in business through public-private partnerships, but Collective Impact sought to integrate the third sector — nonprofits — into cross-sector collaboration. Initiatives such as StriveTogether and the Elizabeth River Project have shown how this model can bring together disparate stakeholders to address complex social and ecological issues.

Nonprofits, as intermediaries between policy and community, play a critical role in this framework. As these issues evolve, integrating philanthropy into collective impact strategies will be essential.

In parallel, donor-advised funds have emerged as one of the fastest-growing philanthropic vehicles. The sheer scale of wealth accumulating within DAFs, currently surpassing a quarter of a trillion dollars, continues to surprise analysts. As these funds grow at an average rate of 23% annually, much of this capital remains largely undistributed. Donors continue to advise their individual funds, directing resources to causes that align with their personal interests, thus reinforcing traditional, siloed approaches to philanthropy.

Yet for donor-advised funds, this represents unrealized potential — an opportunity lost. Imagine for a moment multiple donor-advised funds converging under a shared vision — moving beyond single-issue charities to form a coordinated collective of donors, each directing resources toward multiple interrelated causes. This approach could amplify impact, achieving outcomes that extend beyond the reach of any individual organization. By bringing DAFs together to form collectives of giving, the philanthropic landscape could spark longer-lasting large-scale change. Of course, this is not without potential roadblocks.

For this vision to materialize, it requires seamless integration with the broader ecosystem. The private sector can provide the scalability and innovation needed to transform philanthropic efforts into market-driven solutions. Government, in turn, must establish the regulatory environment to support and incentivize these partnerships, ensuring that public policy is aligned with social impact objectives. Nonprofits are critical in translating capital into action, ensuring that initiatives remain community-focused and outcome-driven. This multi-sector collaboration is essential: not just to combine resources, but to create a cohesive, adaptive strategy that addresses systemic issues at scale.

While challenges remain, including legal complexities, divergent donor priorities, and logistical hurdles, these can be addressed by leveraging the expertise of DAF sponsors, donors, and legal professionals to bridge sectors and maximize philanthropic impact using existing infrastructure.

Further:
¹ Horst Rittel and Melvin Webber, “Dilemmas in a General Theory of Planning,” Policy Sciences, 1973.
² John Kania and Mark Kramer, “Collective Impact,” Stanford Social Innovation Review, 2011.