Donor-advised funds (DAF) reached record territory in 2020, whether it was distributions crossing the $30-billion mark for the first time or the number of individual DAF accounts eclipsing one million in the United States.
Contributions to DAFs continued to grow, totaling $47.85 billion in 2020. That’s up more than 20% over 2019 and accounted for more than 10% of total giving in the United States, based on Giving USA’s estimated $471.4 billion in giving during 2020.
As recently as 2016, contributions to DAFs topped $25 billion, according to the report. The compound annual growth rate for contributions from 2016 to 2020 was 17.4% and the 20.6% growth in contributions during 2020 exceeded the 10-year average increase of 18.1%.
Charitable assets under management in all DAFs approached $160 billion in 2020, a nearly 10% increase from the $145.49 billion in 2019. The compound rate for charitable assets over the last five years was 16.6%. “Continued growth of charitable assets under management reflects increases in the number of funds, in contributions from donors, and in market gains – all of which lead to increased grantmaking from DAFs,” according to the report.
The historic data file includes records from 1,096 sponsors which operated during at least some of the period since 2007. This edition of the Donor-Advised Fund Report relies on data from 976 charitable sponsors that reported assets in any year from 2016 through 2020.
Community foundations make up the majority of DAF sponsors (603), followed by single-issue charities (318), which are those that work in a specific topic area, such as universities, Jewish federations and other faith-based charities, and issue-specific charities, like those in international relief, social justice or the environment. National charities (55) make up the smallest portion of sponsors and include organizations that are independent or are affiliated with investment firms. Yet national charities distribute over 155% more grant dollars than the other two sponsor types combined. The largest DAF sponsors are national charities that have fiscal year-ends on June 30, which means that the significant DAF grantmaking that occurred at the end of the 2020 calendar year is not reflected in this total and will be captured in next year’s DAF Report.
Grantmaking increased from 2019 to 2020, with some of the highest increases in DAF grant growth on record across the board:
Aggregate grant payout rates from DAFs annually exceed 20% in every year on record, including 23.8% in 2020 — the highest on record since 2011, when the aggregate payout rate was 24.2%. The report follows the Candid model for calculating grant payout rates for independent foundations, which is this year’s grants divided by last year’s total assets.
National charities dwarf community foundations and single-issue charities in most categories, usually doubling the other two categories combined, including the number of DAF accounts (864,099), assets ($110.15 billion), grants ($21.17 billion) and contributions ($33.26 billion). Community foundations, however, have the largest average DAF account ($543,553), followed by single-issue charities ($244,238), and national charities ($115,901).
The average size of an individual DAF account is estimated to be $159,019 in 2020, a 5.5% decrease from the average $168,355 in 2019. The emergence of workplace giving DAFs and sponsoring organizations that have no or low contribution minimums has affected the number of DAF accounts, according to the report. Those increasing numbers combined with modest growth in charitable assets decreases the average DAF account size.
NPT began tracking donor-advised fund data in 2007. This report provides an up-to-date analysis of DAFs, based on data collected during the second quarter of 2021 about DAFs and the charitable sponsors that operated them in fiscal year 2020.
The report analyzes fiscal year 2020, which for some charities begins as early as March 2019 and ends as late as December 2020. The COVID-19 pandemic emerged in early 2020 and continues while other events also played a role in the data, such as the wildfires in Australia and the U.S., tropical storms in the U.S., Central America and Southeast Asia, as well as demonstrations to advance racial equity.
The next NP Trust report will include data from the final six months of 2020 for the 33% of DAF charitable sponsors whose fiscal year ends June 30, which includes some of the largest DAF sponsors. Historical grantmaking is projected to be sustained similar to other times of great need, like in the Great Recession of 2008-09, according to NP Trust, which expects the long-term effects of COVID-19 will continue to play out in subsequent reports. “We are still experiencing the effects of these events in our country and around the world. As many DAF sponsors report on a fiscal year schedule, this report does not yet show the full DAF response to these events,” NP Trust President and CEO Eileen Heisman said in a letter accompanying the annual report.
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