Grants made through donor-advised fund accounts hit an all-time high of $12.49 billion in 2014, a 27-percent increase from 2013’s $9.83 billion. Donor-advised fund accounts, which refer to irrevocable, tax-deductible contributions administered by a charitable sponsor with grants recommended by donors, accounted for 7.6 percent of all individual giving and 5.5 percent of all gifts to charities in 2014.
The number of donor-advised fund accounts increased by 8.8 percent during the past year, to 238,293, according to the National Philanthropic Trust’s (NPT) 2015 Donor-Advised Fund Report. Private foundations, by comparison, increased in number by 3 percent from 79,616 to 82,045, according to the report. Charitable remainder annuity trusts decreased during the past year by 7.7 percent, from 13,494 to 12,459. This year’s report was based on data collected from more than 1,000 foundations and charities from July 1, 2014 to June 30, 2015.
Other key findings from the report include:
- • Total contributions to donor-advised fund accounts hit an all-time high of $19.66 billion in 2014, a 14.1-percent increase compared to 2013;
- • Charitable assets in donor-advised funds reached $70.7 billion, up from $57.08 billion in 2013; and,
- • The average account size climbed to $296,701, a 13.7-percent increase compared to 2013’s average of $260,626.
Eileen Heisman, CEO of NPT and author of the report, attributed the growing popularity of donor-advised fund accounts to the ease in setting one up, as opposed to the time and oversight associated with establishing a private foundation. Donor-advised fund accounts can often be set up and managed online, Heisman said, a perk considering the growing popularity of online banking.
“You can create a formal giving vehicle that will last for generations within a day and fund it in a couple of days,” Heisman said. She also credited financial service companies’ creation of charities for changing the conversation around giving. Several such companies, including Fidelity and Goldman Sachs, are included in the report.
Heisman acknowledged that, despite outnumbering private foundations nearly three to one, donor-advised fund accounts possess just one-tenth of the assets. Private foundation payouts hover at about 5 percent however, according to Heisman, while donor-advised fund accounts’ payouts have consistently been more than 20 percent, including 21.9 percent in each of the past two years.
NPT expects for the number of donor-advised counts, contributions and gifts all to continue to grow. Though the trust does not track the types of contributions made to accounts, the giving of illiquid assets is expected to increase in popularity as donors, charities and advisors become more educated about them. Illiquid assets, such as real estate, are only eligible for deductions equal to the cost of purchase when gifted to private foundations, Heisman said, while similar gifts made to donor-advised fund accounts are eligible for deductions equal to fair-market value. “The impetus is coming out of donors, charities and advisors,” Heisman said of the donation of illiquid assets. “I think the [increased contribution of] illiquid assets is being fueled by all three areas.”
For a copy of the full report, visit: www.nptrust.org/daf-report.