What philanthropists need to know about Trump accounts

The philanthropy landscape is changing in ways that greatly extend the reach of charitable giving. This is welcome news for donors large and small. While traditional approaches such as direct grants and institutional donations continue to prevail, today’s philanthropists can draw on a broader toolkit to pursue their goals. Credit the complementary powers of financial innovation and targeted public policy.

The two forces come together in “Trump accounts,” (TAs), which were created as part of the One Big Beautiful Bill Act that was enacted last year. TAs are tax-advantaged savings vehicles that encourage long-term investment starting in childhood. Think of a TA as an individual retirement account with a unique set of rules.

A new kind of philanthropy

These new accounts illustrate how public policy can establish the infrastructure that philanthropists can then use in their charitable endeavors. In this way, private capital and public systems can work together to expand economic opportunity.

Briefly:

TAs can be established only for an “eligible individual,” who is both the account owner and beneficiary. The law defines an eligible individual as anyone who:

• Is a U.S. citizen with a Social Security number
• Will not turn 18 before the end of the calendar year
• Has had a TA established at the election of an adult (known as an “authorized individual”)

To encourage families to open these accounts, the U.S. government will make $1,000 “pilot program” contributions to eligible TAs.¹ Before the year the beneficiary turns 18 (years known as the account’s “growth period”), the account may invest only in “eligible investments.”² After that period, the account beneficiary has unilateral access to the account, subject to early withdrawal penalties and ordinary income taxes.

From a policy perspective, these accounts aim to expand asset ownership, encourage early participation in capital markets, and promote long-term financial accumulation. From a philanthropic perspective, the accounts allow donors to make contributions to TAs, targeting children with limited financial access or opportunity.

TAs could complement traditional philanthropic strategies. For philanthropists who already support initiatives such as direct cash transfers, financial literacy programs, entrepreneurship initiatives and education access programs, TAs may serve as another useful approach.

Some donors are using their philanthropic foundations to expand access to economic opportunities through TAs.

Case Study: Michael and Susan Dell

Michael and Susan Dell have committed $6.25 billion through their charitable vehicles to give a financial head start to millions of children born before the federal newborn contribution dates. This gift is expected to seed 25 million accounts with $250 for eligible children born from 2016 to 2024 in ZIP codes with a median family income of $150,000 or less. It’s one of the largest single private commitments in history to America’s children, enabled through the direct giving mechanisms that are built into TAs.

Case Study: Dalio Philanthropies

Dalio Philanthropies has committed to match the Dell donations for the same population of students in Connecticut, thus doubling the amount they will receive. The decision was “inspired by Ray’s personal start as a young investor and Barbara’s decades of experience working closely with at-risk and disconnected young people in Connecticut’s schools,” said a statement by the philanthropy, referring to Ray Dalio and his wife Barbara.

“Ray Dalio feels he has lived the American Dream because of investing,” a Dalio spokesperson said. Ray and Barbara “are thrilled to provide this help along with the Dells and all the others who are behind the funding of Trump accounts.”

The Dalio initiative includes tens of millions of dollars in deposits, contributions directed toward children in economically challenged communities and state-level participation to expand financial opportunity. The program aligns with the foundation’s focus on economic resilience and opportunity access.

A complement, not a replacement, for traditional charitable giving

Initiatives such as TAs can supplement philanthropic options without replacing existing approaches such as foundations, direct grants and donor-advised funds. Policy-aligned contributions allow philanthropists to:

• Advance similar missions through multiple channels, supporting economic mobility and financial inclusion through both grantmaking and long-term savings deposits.
• Leverage public infrastructure while maintaining independence. Donors can amplify impact through government-supported systems while directing their own capital.
• Expand reach without restructuring existing philanthropy. 
• Support short-term outcomes with grants addressing immediate needs, while also improving long-term outcomes, as investment accounts build generational financial participation.

Set clear objectives, ask the right questions

As always, the most effective philanthropic strategies begin with clear objectives. When those are clearly defined, philanthropists can deploy the appropriate combination of tools (traditional grantmaking, direct cash transfers and savings vehicles) to build strategies with durable impact. Before adopting new structures, philanthropists should consider:

• What problem are we trying to solve? Are we focused on short-term stability or long-term asset formation?
• Are we influencing systems, behavior, or access to opportunity?
• Over what time horizon will success be measured?

Setting clear objectives, asking the right questions – these time-tested principles always apply across the philanthropy landscape, regardless of the new techniques available to achieve charitable goals.

We can help

Talk to your J.P. Morgan team to discuss how the TA initiative might align with your philanthropic goals.