Donor-advised funds continued to be the talk of the philanthropy world in 2017 — as an agent of change and, according to critics, a sideliner of money that should go directly to doing good.
National Philanthropic Trust reported earlier this year that DAFs were the fastest-growing giving vehicles in the U.S., growing by 6.9% between 2015 and 2016.
They are also a money-raising juggernaut. The Chronicle of Philanthropy reported that seven organizations at the top of its ranking of the 400 biggest charities that raised money from private resources in 2016 were mainly built on DAFs, and accounted for nearly 25% of total dollars donated to the 400 charities.
Consider these trends, noted by Linda Wolohan at Vanguard Charitable, a major DAF sponsor. As of mid-December, Vanguard had seen a 45% year-over-year increase in new accounts, a 41% increase in the number of contributions and a 40% increase in the number of grants.
In addition, Wolohan said, 81% of gifts from Oct. 1 to Dec. 12 were noncash assets, including appreciated securities. As well, 80% of grants during that period were unrestricted. “This is a positive trend because it shows donors are trusting charities to put the money toward their area of greatest need,” she said.
Critics accuse DAFs of undermining American philanthropy by not distributing their assets in a timely manner.
In response, big sponsors point to grant-making numbers by their account holders. For example, Schwab Charitable reported in January that it had facilitated some $1.5 billion in grants to charities in 2016, a 41% increase from the year before. These grants supported 61,000 charities, it said.
In February, Vanguard Charitable reported that it had supported 30,000 charities in the U.S. and internationally in 2016, up 9% from the year before. These included 7,400 first-time grantee organizations, representing nearly a tenth of all grants for the year. Vanguard’s account holders recommended 78,000 grants in 2016, a 13% increase over 2015. The average account granted $56,000 during the calendar year.
In a paper published late last year, the Manhattan Institute addressed three other complaints about DAFs.