Donor-advised funds in the U.S. have been on a roll during the past five years, their number tripling and grants to charities from DAFs nearly doubling, National Philanthropic Trust reported this week.
Grants from DAFs in fiscal 2018 grew by 18.9% to a record $23.4 billion, according to NPT’s latest annual report. Total DAF assets available for grantmaking increased to $121.4 billion, up 8.3% from fiscal 2017.
Contributions to DAF accounts, intended to be used for charitable purposes, grew by 20.1% to $37.1 billion, representing 12.7% of all individual giving in the U.S., NPT reported, citing data from 2019 Giving USA.
“This is the first Donor-Advised Fund Report that fully captures donors’ response to tax reform and its implications for charitable giving in December 2017, before the new laws were enacted,” NPT’s president and chief executive Eileen Heisman said in a statement.
“Contributions to DAFs outpaced grants for the first time in four years, which may indicate donors choosing to ‘bunch’ their giving — essentially pre-funding several years of charitable giving to make their philanthropy more tax effective. We can’t yet predict a definitive trendline, but it is clear DAFs are a philanthropic solution that many donors chose in response to the new tax laws.”
NPI examined 2018 IRS Form 990 filings by 989 national charities, community foundations and other charities that sponsored DAFs.
According to the annual report, DAF accounts in the U.S. increased by 55.2% from 2017, making them the fastest growing charitable giving vehicle in the country, while their payout rate to qualified nonprofits fell from 22.8% to 20.9% in 2018.