Recently, donor-advised funds (DAFs) have been in the spotlight. In 2017, 6 of the top 10 recipients of charitable giving revenue were donor-advised funds (Chronicle of Philanthropy). While a donor-advised fund sponsor is a public charity, many consider charities that administer DAFs separate from traditional public charities. As a result, some feel that DAFs hinder the work of charities. As such, giving to a DAF instead of directly to a charity is seen as delaying the public benefit of those charitable dollars. However, as a fast-growing charitable giving vehicle, there is not a lot of information available.
Consequently, the National Philanthropic Trust has tracked data about donor-advised funds since 2007. For the 2018 report, the information is:
“…based on data collected during the second and third quarters of 2018 about donor-advised funds and the charities that operate them in fiscal year 2017.” (“2018 Donor-Advised Fund Report,” About this Report, 2018)
With this in mind, let's look at the data.
Highlights from The 2018 DAF Report:
463,622 individual DAFs throughout the U.S.
$29.23 billion donated to DAFs
$19.08 billion in grants from DAFs to qualified charities.
$110.01 billion in total charitable assets held by donor-advised funds.
2018 is the first year that the value of charitable assets in donor-advised funds passed the $100 billion mark. (“2018 Donor-Advised Fund Report,” Introduction, 2018)
DAF vs. Overall Giving:
Next, let's look at overall giving in 2017:
$410.02 billion in total estimated charitable contributions in the U.S.
70% of this or $286.65 billion is attributed to individual giving.
10.2% or $29.23 billion were contributed to donor-advised funds.
(“2018 Donor-Advised Fund Report,” About this Report, 2018)
DAF vs. Private Foundation:
Often, donor-advised funds are viewed as a cheaper alternative to private foundations.
Unlike DAFs, private foundations are required to annually distribute a minimum of 5% of the fair market value of its assets. Comparatively, let’s look at the payout rates for DAFs and private foundations:
DAF Payout Rates
2017: 22.1%
2016: 20.6%
2015: 20.3%
Private Foundation Payout Rates
2017: 6.2%
2016: 6.1%
2015: 6.2%
Based on this data, we see that DAFs consistently have higher payout rates than private foundations in recent years.
Summary:
To sum up:
Charitable contributions to a DAF only accounted for approximately 10% of the overall giving in 2017.
Individual giving still accounted for 70% of all charitable giving in 2017.
DAFs have consistently had a higher payout rate than private foundations for 2015-2017.
In this day and age, it is easy for the lack of widespread data to skew the perception of the charitable impact of DAFs. As more research is done, it will show that giving through DAFs will be just as impactful as giving directly to a charity.
Read the full report here!
Sources
2018 Donor-Advised Fund Report. (2018, January 1). Retrieved February 26, 2019, from https://www.nptrust.org/reports/daf-report/
Chronicle of Philanthropy, "How Much America's Biggest Charities Raise: 27 Years of Data", October 31, 2017
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