$2 Trillion Is Sitting in Foundations and DAFs While 69% of Nonprofits Took Funding Cuts. The New IPS Numbers, and What a Grantseeker Should Do With Them.

Sector reports about foundation payout usually get read as advocacy and filed. This one should be read as prospect research.

The Institute for Policy Studies released Gilded Giving 2026: Philanthropy Under Oligarchy on September 15, 2026, authored by Chuck Collins, Bella DeVaan, Helen Flannery, and Dan Petegorsky. Its headline findings will be debated on policy grounds for months. But underneath the policy argument is a set of measurements that tell a fundraiser something concrete: where the money is, how fast it moves, and which vehicles are structurally incapable of moving faster without a decision by a specific person.

That is actionable. Here is the analysis.

The numbers

Foundation payout. The median payout among 144 mega-foundations with endowments over $1 billion was 5.1 percent in 2024 — against a legal minimum of 5 percent and foundation market returns of 12 percent that year and 7.2 percent on a five-year average. IPS calculates that if the 121 billion-dollar foundations paying less than 10 percent moved to 10 percent, an additional $23.4 billion would reach charities.

Read the spread, not the level. A 5.1 percent median against 12 percent returns means the typical mega-foundation grew in real terms while distributing the statutory floor. The floor has become the ceiling.

Donor-advised funds. DAF sponsors now make up 11 of America's top 20 charities by contributions received. DAF assets have grown 475 percent over 16 years, and combined assets at major sponsors have grown 64 percent faster than grants since 2017. By 2025, the sector held $6.84 in assets for every $1 granted out — with National Philanthropic Trust at $8.73 per $1 and DAFgiving360 at $5.33 per $1.

That ratio is the single most useful number in the report for a fundraiser, because it is a velocity measure rather than a stock measure. It says roughly how many years of current grantmaking are already sitting in the account.

The combined pool. Private foundations held $1.865 trillion at the end of 2025; DAFs held $328 billion at the end of 2024. Together, over $2 trillion as of 2026.

The intermediation shift. DAFs and foundations accounted for 38 percent of individual giving in 2024, projected to reach 50 percent by 2028. DAFs alone went from 4 percent of giving in 2010 to 23 percent in 2026.

The demand side. 69 percent of nonprofits reported funding cuts in 2025. 65 percent reported increased demand for services in 2025, rising to 73 percent in 2026. 46 percent expressed concern about closure or merger, roughly a third reduced services, and most hold only months of reserves.

Concentration. Mega-gifts above $600 million totaled $19.22 billion in 2025. The share of large foundations with a living billionaire in leadership rose from 24 percent a decade ago to 48 percent now. MacKenzie Scott accounted for a third of all mega-gifts last year, has given roughly $27 billion since 2017, and saw her net wealth decline $7.4 billion between 2020 and 2026 — a rare case of giving outpacing asset growth.

IPS estimates the taxpayer subsidy at up to 73 cents per dollar donated for the highest-bracket donors, and puts funding for social movements in the low single-digit percentage range of total giving, roughly $2 billion.

What the report is actually measuring

Strip the framing and the report describes a structural mismatch in timing.

The nonprofit sector's need is immediate and rising — 73 percent reporting higher demand, a third cutting services, most running on months of cash. The philanthropic sector's dominant vehicles are designed for permanence. A private foundation optimizing for perpetuity at a 5 percent payout against 7 to 12 percent returns is not failing at its job; it is succeeding at a different job than the one grantseekers need done. A DAF with no distribution requirement at all is even further from that need.

This is why the policy recommendations cluster around timing: raise the foundation payout from 5 to 10 percent, impose a three-to-five-year DAF payout requirement, modify when the tax benefit attaches. IPS projects a 10 percent foundation payout would unleash $351 billion from 2026 through 2029, and a five-year DAF payout requirement $213 billion over the same period.

Whether those reforms are good policy is a real argument with serious people on both sides. Whether they will happen soon enough to matter to your FY2027 budget is not. Assume they will not, and plan against the system as it is.

Turning the aggregates into prospect research

Here is the method the report's underlying data supports.

1. Compute payout rate for every foundation on your prospect list. The 990-PF is public. Qualifying distributions divided by average net investment assets gives you the number. Sort your prospects by it.

A foundation distributing 5.0 to 5.2 percent against a growing corpus is running a perpetuity model. That does not mean do not apply — it means the size of your ask should be calibrated to a grantmaking budget that is fixed as a fraction of assets and will not flex for your urgency. A foundation distributing 7, 8, or 12 percent has made a different institutional choice, and that choice is the strongest available signal that a compelling case can move real money.

2. Distinguish real increasers from asset-growth artifacts. A foundation whose grantmaking dollars rose 15 percent while its assets rose 18 percent has not increased its commitment; it has tracked the market. Look at the rate, not the dollar total, across at least three years. This is the most common analytical error in foundation prospecting and it wastes an enormous amount of cultivation effort.

3. Read sponsor-level DAF ratios as a routing signal, not a targeting one. You cannot solicit a DAF sponsor — the advisory privilege belongs to the donor. What the $6.84-per-$1 figure tells you is that a large amount of committed charitable money sits one decision away from disbursement, and that the decision-maker is an individual you may already know.

The operational consequence: ask your existing individual donors whether they hold a DAF, and ask directly. Most nonprofits never do. A donor giving you $2,500 a year in cash may hold a six-figure DAF balance they have not thought about in eighteen months. Make sure your website lists your EIN and legal name in a findable place, make sure you can accept DAF grants without friction, and make sure your acknowledgment process handles them correctly — DAF grants cannot be receipted as deductible contributions to the advisor, and getting that wrong is a credibility cost.

4. Track the living-billionaire signal. With 48 percent of large foundations now having a living billionaire in leadership, up from 24 percent, the decision-making at a meaningful share of major foundations is personal rather than institutional. Personal decision-making is faster, less bound by program guidelines, and more responsive to direct relationship — and also more volatile. For organizations that can reach a principal, this is an opening. For organizations relying on published program guidelines, it is a source of unpredictability to hedge against.

5. Understand the Scott model and stop waiting for it. One donor produced a third of all mega-gifts last year, through a process with no application, built on external nomination and due diligence. It is worth being findable and legible — clean financials, clear outcomes data, public presence. It is not worth building a plan around.

6. Take the sector numbers seriously in your own planning. If 46 percent of organizations are worried about closure and a third are cutting services, then merger conversations, fiscal sponsorship, and shared back-office arrangements are ordinary strategic options this year rather than admissions of failure. We looked at funders explicitly underwriting that work in bridge grants that fund exits.

The uncomfortable part

IPS sorts donor behavior into three patterns: accumulation — warehousing wealth in foundations and DAFs; capitulation — self-censoring and retreating from commitments under political pressure; and solidarity — raising payout, funding movements, aligning investments with mission.

That taxonomy is contestable. But the middle category names something grantseekers have been experiencing all year without a vocabulary for it: funders quietly narrowing language, dropping program areas, and declining to fund work they funded two years ago, for reasons they do not put in writing. If a longtime funder has gone vague on you in 2026, you are probably not imagining it, and it is probably not about your organization.

The practical response is the unglamorous one. Diversify the funder base faster than feels comfortable. Weight your prospecting toward funders whose payout behavior shows they intend to spend. Ask your individual donors about their DAFs. And treat unrestricted multi-year money — from anywhere — as worth a meaningful premium over restricted project money of the same face value, because in a year when 73 percent of the sector reports rising demand, flexibility is the scarcest thing on offer.

The $2 trillion is real. So is the fact that most of it is not coming this year. Plan for both.

Sources: Institute for Policy Studies, Gilded Giving 2026: Philanthropy Under Oligarchy, DAFgiving360 fiscal year 2026 results, Chronicle of Philanthropy on 2026 payout policy prospects.