Donor-advised funds (DAFs) had a banner year in 2012, with contributions up almost 35 percent and assets under management gaining nearly 19 percent, according to the National Philanthropic Trust’s 2013 Donor-Advised Fund Report.
The Jenkintown, Pa.-based organization examined data from 1,007 charitable organizations sponsoring DAFs: 47 national charities, 357 single-issue charities and 603 community foundations.
All told, contributions to DAF accounts captured about 4 percent of approximately $316 billion given to charity in 2012. Assets under management totaled $45.35 billion last year, up from $38.14 billion in 2011, a gain of 18.9 percent. Contributions to DAF accounts grew 34.6 percent in 2012 to $13.71 billion, compared with 2011’s total contributions of $10.19 billion.
DAFs grew by almost every metric in the report. The total number of DAF accounts jumped from 188,487 in 2011 to 201,631 – an increase of 7 percent. In 2007, there were 160,415 accounts with $31.97 billion in assets under management. The average size of a DAF account grew 11.2 percent last year, from $202,341 in 2011 to $224,921 in 2012.
Grants from DAF accounts also grew last year to their highest level in five years: $8.62 billion, up from $8.08 billion in 2011, a 6.7-percent increase. Grants from DAF accounts have fluctuated since 2007, when the total was $6.31 billion. They grew to $7.09 billion in 2008 before dropping to $6.51 billion in 2009, only to grow again in 2010 to $7.01 billion.
Payout, however, declined 9.1 percent, from 17.5 percent in 2011 to 16 percent last year. The payout percentage is determined by dividing the total of assets under management and grant dollars by grant dollars and then multiplying by 100. “This decrease reflects the rapid rise of assets in donor-advised fund accounts and only a modest rise in grants from donor-advised fund accounts, particularly at national sponsors,” wrote the authors of the report.
Private foundations were the only other charitable vehicle to show positive growth, growing from 73,764 to 77,000. Charitable remainder unitrusts, charitable remainder annuity trusts, charitable lead trusts and pooled income funds all saw single-digit percentage declines.
DAFs also grew the most in terms of assets, with an 18.9 percent jump. Charitable lead trusts grew 13.1 percent, from 20.9 billion in 2011 to $23.7 billion in 2012. Private foundations had by far the most assets, growing from $540.15 billion to $556.35 billion, a 3-percent rise.
The authors of the report cite “rising asset values in the securities market” as one reason for the growth of DAFs but suggest there could be other factors at play. “One possibility is the impact of the year-end ‘Fiscal Cliff’ and the ongoing debate about the charitable tax deduction,” they wrote. “It is reasonable to assume that some donors wanted to make contributions to a donor-advised fund account in 2012 to ensure a charitable tax deduction for their donation at the known rate.”
The report’s authors anticipate another strong year for DAFs in 2013. “Because of the mismatch in fiscal years and calendar years among some donor-advised fund sponsors, the impact of the ‘Fiscal Cliff’ at the end of 2012 will be felt over a two-year period – and two Donor-Advised Fund Reports,” they wrote. Some 58 percent of contributions to DAF accounts went to sponsors with a June 30 fiscal year end. “These charitable sponsors would not have captured the 2012 calendar year end (including the ‘Fiscal Cliff’) in their data,” wrote the authors.