Social Change through Financial Innovation: Evidence from Donor-advised Funds

The Review of Corporate Finance Studies 11, 694–735.

53 Pages Posted: 25 Oct 2021 Last revised: 28 Jul 2022

See all articles by Jillian Grennan

Jillian Grennan

Santa Clara University, Leavey School of Business; Santa Clara University School of Law; University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Date Written: February 1, 2022

Abstract

I draw on new data to examine how donor-advised funds (DAFs), a fast-growing philanthropic option, relate to social progress. DAFs are distinguished by flexibility -- transforming complex assets and separating the timing of tax breaks from giving decisions. While DAFs are often classified by their sponsor type, I introduce a new classification scheme that reflects their economic purpose, including the users targeted, style and features offered, and focus of grant making. This classification reveals that the recent growth is fastest among DAFs that offer FinTech tools, liquidity transformation, and grant making focused on diversity, equity, and inclusion. Conditional correlations show that DAFs with a more innovative style of service distribute more grants to charities serving areas with high inequality, in times of greatest financial need, and with more efficient operations.

Keywords: Donor-advised funds, DAFs, Philanthropy, Nonprofit firms, Impact Investing, Innovation, FinTech

JEL Classification: G32, G24, G28

Suggested Citation

Grennan, Jillian, Social Change through Financial Innovation: Evidence from Donor-advised Funds (February 1, 2022). The Review of Corporate Finance Studies 11, 694–735., Available at SSRN: https://ssrn.com/abstract=3925198 or http://dx.doi.org/10.2139/ssrn.3925198

Jillian Grennan (Contact Author)

Santa Clara University, Leavey School of Business ( email )

Santa Clara, CA 95053
United States

Santa Clara University School of Law ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Berkeley, CA 94720
United States

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