Picture this movie: your father, a devout real estate investor, hardcore Christian, spends decades building wealth. Before he dies, he parks $21 million in a philanthropic fund to make sure the money goes to causes he believes in. You inherit the mission of overseeing it. And then, out of nowhere, the organization managing the fund just hangs up on you and vanishes with all account access.

Sounds like an Ozark script, but it's the real life of Philip Peterson, 63, a Kansas resident.

The Donor-Advised Fund Circus

For the uninitiated, Donor-Advised Funds (DAFs) are the latest craze in American philanthropy. Here's how it works: you dump money, stocks, or other assets into a fund. You get the tax deduction right away. Then you "recommend" where the money goes — which nonprofit, which church, which cause.

In 2024, Americans poured nearly $90 billion into these funds. The total sitting in them? $326 billion just parked there.

The keyword that the slick marketing hides? "Recommend."

Because legally, once you deposit into a DAF, the money is no longer yours. You "recommend" where it goes. But the one actually calling the shots is the organization that manages it — the so-called "sponsor." And if the sponsor decides to ignore your recommendation? Damn, you've got almost zero legal recourse.

As Ray Madoff, a tax law professor at Boston College, put it: "They sell it to the public as if it's your account, where you make all the decisions and maintain total control. But if you don't give up dominion and control, you don't get the tax benefit. There's a chasm between the legal rules and what people understand."

Chasm. That's the right word.

The Peterson Story — When Your "Partner" Becomes Your Jailer

Gordon Peterson, Philip's father, set up the DAF in 2005 with WaterStone, a Christian nonprofit out of Colorado Springs (originally founded as Christian Community Foundation). When Gordon died in 2019, Philip took over as the fund's advisor.

Everything was fine until early 2024, when WaterStone's CEO, Ken Harrison, allegedly informed Peterson that the organization intended to keep the fund's principal untouched forever, distributing only investment income. In plain English: instead of the $2.3 to $2.5 million the family used to donate annually, WaterStone wanted to turn off the spigot.

Peterson didn't agree. He asked to transfer the DAF to another institution.

The response? According to the lawsuit, Harrison told him to never contact them again and killed the Zoom call.

Since then, Peterson claims he has access to zero information about the fund — no balance, no investment positions, nothing. The last data he saw was from the end of 2023, when the fund held $21 million.

The lawsuit was filed in January in Colorado federal court.

WaterStone, for its part, stated that it's "honoring the wishes of Peterson's late father." Convenient, right? The guy's dead and now the organization gets to interpret his wishes however it pleases.

The Trap Nobody Tells You About

This isn't an isolated case. It's a structural flaw in DAFs that almost nobody talks about.

Unlike private foundations, DAFs aren't required to distribute anything on any timeline. Critics have already called them "a wealth accumulation vehicle disguised as philanthropy" — and they're not wrong.

The guy gets the tax deduction on day one. The money can sit there forever. And the donor, who theoretically set the whole thing up to do good, can simply be cut out of the conversation.

Philip Peterson told CNBC that his father never would have created the DAF if he'd known the risks.

Skin in the game in reverse: the guy put in his skin, his hide, and his bones — and now he doesn't even have the key to the door.

If you're an investor, an entrepreneur, or someone thinking about structured philanthropy, burn this into your brain: never confuse a tax benefit with control. They're two completely different things. And the day they part ways, the one left holding the bag will be you — not the institution in the nice suit with the pretty smile that sold you the dream.

$21 million locked behind a door, and the keyholder has decided it's not opening.

Would your father have agreed to this, WaterStone?