Family Sues Nonprofit Over $21 Million Donor-Advised Fund It Can No Longer Access

A family is suing WaterStone after the nonprofit cut off access to their $21 million donor-advised fund. DAFs hold $326 billion with no payout requirements.

Family Sues Nonprofit Over $21 Million Donor-Advised Fund It Can No Longer Access A family is suing WaterStone after the nonprofit cut off access to their $21 million donor-advised fund. DAFs hold $326 billion with no payout requirements. Aaron Rafferty April 03, 2026 Key Takeaways: Philip Peterson filed a federal lawsuit against WaterStone after the nonprofit managing his family's $21 million DAF cut off communication and stopped honoring grant recommendations in early 2024. Americans donated nearly $90 billion to donor-advised funds in 2024, pushing total DAF assets to $326 billion, with no legal requirement to distribute any of it to working charities. Peterson's attorney warned the case could affect billions in DAF assets if courts rule that designated successors have no enforceable advisory privileges. Philip Peterson, a 63-year-old Kansas resident, filed a federal lawsuit in Colorado against WaterStone, the nonprofit managing his family's $21 million donor-advised fund, alleging the organization cut off communication and stopped honoring his grant recommendations in early 2024. Peterson's father, real estate investor Gordon Peterson, created the fund in 2005 to support evangelical Christian causes. He died with WaterStone's help appointing his wife and son as co-advisors. After his mother died in 2021, Philip became the sole successor-advisor. The core of the dispute is a question most donors never think to ask: once money goes into a DAF, who actually controls it? The legal answer is the sponsoring organization. Not the donor. Not their children. The "advisory" in donor-advised fund is not a legal guarantee. It is a suggestion. Peterson told CNBC that when he informed WaterStone he wanted to transfer the fund to another sponsor in March 2024,