The donor-advised-fund juggernaut continued to set records in 2018, according to National Philanthropic Trust’s annual report, released in October.
Assets destined for charitable grant making in all DAFs surpassed the $100 billion mark for the first time in 2017, the latest period for which data were available. Grants to qualified charities totaled $19.1 billion in 2017, up from $15.9 billion the previous year. The grant payout rate was 22.1%, nearly four times higher than that of private foundations, according to NPT.
For their part, private foundations with less than $50 million in assets earned more, gave more and received more contributions from their donors in 2017 than they did during the previous year, Foundation Source, a support services provider for private foundations, reported in July.
Aggregate assets held by a sample of 927 foundations increased from $4 billion at the end of 2016 to $4.5 billion by the end of 2017. Donors’ commitment to their foundations was evident in their contributions: 83 cents for every 89 cents they disbursed as grants and for related expenses.
Trends in Giving
Earlier this year, Cygnus Applied Research released its ninth annual Burk Donor Survey, which is designed to chart year-over-year changes in giving and how donors intend to give in the next 12 months.
The online survey, completed between March and May by 12,232 donors, found that 53% gave more to charitable causes in 2017 than they had the year before. These included nearly three-quarters of younger donors, compared with around half of either middle-aged donors or those over 64.
Only 8% of respondents reported giving less than the year before, the lowest percentage ever recorded, according to the study.
Among donors who gave more in 2017, 55% said the main reason was their own financial stability, while 41% said the reason was impressive performance by some or all of the causes they supported. Notably, 38% reported giving more because of the outcome of the 2016 presidential election.
According to the survey, online giving for the first time in 2017 drew even with giving by direct mail, which had been declining for three years. Giving preferences differed by age, with 59% of the oldest respondents but only 22% of those younger than 35 saying they had responded to direct mail appeals.
The survey also found that donors were changing the ways they give, often faster than nonprofits or fundraisers could adapt. Eighty-one percent of respondents said they were more likely to reduce or stop support to charities whose administrative costs appeared too high, and 74% said the same about causes that spent too much on fundraising.
Sixty-two percent of respondents reported that they conducted more research before making a giving decision than they did five years ago. Two-thirds said they were likelier than five years ago to favor charities that provide measurable results on what they had accomplished with donors’ contributions.
Foundation Growth Surges
In April, UBS reported dramatic growth in private foundations around the world over the past 25 years. The sector’s expansion, it said, was driven by global economic growth and the huge increase in private wealth accumulation; persistent economic and social inequalities; and governmental and private efforts to encourage and support philanthropic institutions and giving.
Researchers at Harvard identified 260,358 foundations in 38 countries and Hong Kong — though most were highly concentrated in rich countries, with 60% in the U.S. and 37% in Europe — whose combined assets approached $1.5 trillion.
With education the number one philanthropic priority around the world, the study found that philanthropic organizations were using a variety of social investment strategies to maximize their impact. One way was through collaboration with other foundations and with government. However, researchers found this to be easier in some countries than in others.
Women Creating Wealth, Giving Back
An RBC Wealth Management study showed that women were using the wealth they had created on their own to support their communities and create opportunities for others.
Six in 10 U.S. women in the RBC survey said better education, investments and new technologies were the main factors that had helped them generate their wealth. About half cited greater access to information and more than a third openness to entrepreneurship.
Women in the top wealth bracket most often cited the ability to make the greatest impact as the key factor influencing their charitable giving decisions, while their male counterparts cited tax benefits.
The Most Generous Country?
Eileen Heisman, president and chief executive of National Philanthropic Trust, said that the stunning growth in DAFs reflected the charitable instinct of Americans “who are among the most generous donors in the world.”
Many would say they are the most generous, considering that American people, foundations and companies donated roughly $410 billion in 2017, or about 2.1% of the country’s own GDP — more than the entire GDP of all but about 40 countries in the world, according to Gallup.
“Some might argue that America’s generosity is made easy because of its wealth,” Jon Clifton, global managing partner at Gallup, wrote in the introduction to a recent study. “And that if people in other countries could give more, they would.”
Instead of looking at how much people give, Gallup addresses the generosity question with a different metric, its Civic Engagement Index. Each year, Gallup researchers conduct a survey in some 140 countries to find out how many people in a country give, and the number of people who volunteer their time or help a stranger.
The pollster’s latest survey of more than 153,000 adults in 146 countries showed that the most generous countries on the Civic Engagement Index were Indonesia and Australia, followed closely by the U.S. and New Zealand. This suggests one thing, according to Clifton: “You don’t need to be rich to give back.”
Indeed, Indonesia, Kenya and Myanmar, where people have far less to give than Americans, all ranked among the highest in the world on the index. Other rich world countries in the top 10 were the U.K. and Singapore.
Clifton noted that the survey showed how generous the whole world is. Almost 1 billion people reported volunteering their time to an organization in the past month, nearly 1.4 billion said they had donated money to a charity and more than 2 billion reported helping a stranger in need.
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