Are wealthy Indian Americans setting up private foundations and donor-advised funds?

The short answer

Wealthy Indian American families use the same charitable vehicles as other high-net-worth Americans: private foundations, donor-advised funds (DAFs), and direct gifts to universities, hospitals and nonprofits. What is missing is a statistic. Neither the IRS nor the main DAF research groups report foundations or DAF accounts by the donor's ancestry, so any claim about how many Indian American foundations exist, or how much they hold, should be treated as an estimate at best.

The public record does show leading examples. Vinod and Neeru Khosla signed the Giving Pledge, a public commitment to give away the majority of one's wealth, in 2011¹. Manoj Bhargava, founder of 5-Hour Energy, signed in 2012²; his pledge letter says his foundation has adopted over 400 charities, from schools and hospitals to women's career education in rural India². The Chronicle of Philanthropy reported that Bhargava and Romesh Wadhwani, founder of Symphony Technology Group, both born in India, were among the same group of new signers⁶. For the wider picture, see Indian American philanthropy and the richest Indian Americans.

What HeyAlbert data shows

How a private foundation works

A private foundation is a separate charitable entity, usually funded by one family, that makes grants and sometimes runs its own programs. It gives the family control over investments, grantmaking and governance, and a lasting family name, but comes with rules:

• Annual payout: a non-operating private foundation must distribute a minimum amount each year, based on a minimum investment return of generally 5% of the fair market value of its noncharitable-use assets⁴
• Penalty for under-distribution: a 30% excise tax on undistributed income, with an additional 100% tax if it is not corrected⁷
• Investment income tax: a single 1.39% excise tax on net investment income for tax years beginning after December 20, 2019⁵
• Public disclosure: foundations file Form 990-PF, which is publicly available

Foundations suit families who want to involve children and grandchildren in giving over generations, a theme in intergenerational wealth transfer among Indian Americans.

How a donor-advised fund works

A DAF is an account held at a sponsoring charity, such as a community foundation or the charitable arm of a financial firm. The donor gets a tax deduction when contributing and recommends grants over time, but the sponsor legally controls the assets. DAFs are simpler and cheaper than foundations and offer more privacy.

They are growing quickly. According to the DAF Research Collaborative, which analyzes IRS Form 990 data, total DAF assets grew 27.9% to $327.87 billion in fiscal 2024; contributions rose 38.6% to $90.57 billion; grants rose 17.9% to $64.60 billion; and the average account size was $91,300³. Founders and executives often use DAFs to donate appreciated stock before or after a liquidity event, a link we explore in equity compensation for tech executives and the largest Indian American IPOs and exits.

Foundation or DAF?

	Private foundation	Donor-advised fund
Control	Family board controls assets and grants	Sponsor controls; donor recommends
Payout rule	Annual minimum based on 5% of noncharitable assets4	No federal minimum for individual accounts
Taxes	1.39% excise tax on net investment income5	None at the account level
Privacy	Form 990-PF is public	Grants can be made anonymously
Cost and setup	Legal entity, staff, filings	Opened in days at a sponsor

Many wealthy families use both: a foundation for signature programs and a DAF for flexible or anonymous giving.

Cross-border giving

Many Indian American donors want to support causes in India. US tax rules generally require that a deductible gift go to a qualified US organization, so gifts for Indian causes often run through US public charities that fund work in India, or through a foundation that makes grants abroad under its own due-diligence rules. Indian rules on receiving foreign contributions add a further layer for the recipient organization. Donors with substantial assets in India also need to coordinate charitable plans with their estate plans; see cross-border estate planning.

Why it matters

For nonprofits, universities and advisors, foundations and DAFs are where much major giving now originates. Large university gifts from Indian American donors, which we track in the largest Indian American university gifts, often come from family foundations. And for families with an operating business or a family office, the choice of vehicle is part of a broader governance plan; see Indian American family offices.

Political contributions follow separate federal rules and are not tax-deductible charitable gifts; see how Indian Americans participate in political giving.