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Donor-Advised Fund Juggernaut Continues to Dominate Charitable Giving

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However you measure their growth, donor-advised funds as charitable giving vehicles are on a roll.

In 2014, the number of individual DAF accounts, total grant dollars from these accounts, total contributions to them and total assets increased for the fifth consecutive year, according to National Philanthropic Trust’s 2015 annual report.

NPT’s research showed DAF growth between 2013 and 2014 in these metrics:

  • DAF assets: $70.7 billion, up 23.9%
  • Total contributions: $19.7 billion, up 14.1%
  • Total grant dollars: $12.5 billion, up 27%
  • Grant payout (grants relative to assets): unchanged at 21.9%
  • Total number of DAF accounts: 238,293, up 8.8%
  • Average DAF account size: $296,701, up 13.7%

The report projected continued growth in all metrics, particularly in grant making as charitable assets continue to rise.

For the new study, NPT examined a total of 1,016 Section 501(c)(3)-registered charities that sponsor and/or manage DAF accounts.

The report attributed the growth in assets to increases in the number of funds and contributions. It also suggested that investable charitable assets realized gains at all DAF charities, as the stock market’s value increased by 25% in 2013 and 7.5% in 2014.

 (The Chronicle of Philanthropy recently reported that several DAFs now number among the biggest charities in the U.S.)

The NPT report said contributions to DAF accounts represented 7.6% of $358 billion in total charitable giving in the U.S. in 2014. Contributions grew most rapidly at community foundations, up 30.8%, compared with 8% growth at national charities and 5.6% at single-issue charities.

Grants from DAF accounts to charities in 2014 passed the $10 million mark for the first time to reach a new high. Last year’s increase of 27% from 2013 was nearly double the increase between 2012 and 2013 and triple the increase between 2011 and 2012.

According to the report, the number of new DAF accounts grew fastest at national charities in 2014, up 13.1%, while the biggest accounts were at community foundations.

The highest payout rate — grants relative to assets — occurred at single-issue charities.

NPT noted that DAFs have outnumbered private foundations and the combined total of other gift planning vehicles for several years.

The estimated total of 238,293 DAF accounts in 2014 compared with the combined estimated total of 190,447 for private foundations, unitrusts, annuity trusts, lead trusts and pooled income funds. Among these other vehicles, only the number of private foundations experienced growth last year, rising by 3% to 82,045.