Donor-advised fund assets topped $250 billion, but reports say gifts in and out of the fund are falling

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Total contributions to donor-advised funds are down 21.7% in 2023, while grants made to charities from these funds are down 1.4%, according to a new report by the National Philanthropic Trust.

The DAF 2024 report looks at the DAF landscape using data for fiscal year 2023. While contributions and funds provided from DAF both declined, assets held in the fund increased 9.9% to $251.5 billion, according to the report.

“While individual giving is down, DAF grantmaking remains steady,” a National Philanthropic Trust spokesperson said via email. “DAF donors continue to be one of the most consistent sources of funding for charities despite economic and financial challenges.”

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While some fundraisers may look at the new data and think it’s an indication of a decline in DAF popularity, not Danielle Vance-McMullen.

“I don’t think what we’re seeing is a cold donor base,” said Vance-McMullen, one of the founders of the DAF Research Collaborative. “I think we’ve seen the history of donor-advised funds: When the stock market struggles, contributions to donor-advised funds go down. Fortunately, funds from donor-advised funds are relatively resilient.

Critics of donor-advised funds point to the report’s data as evidence that wealthy donors are “hoarding” money in funds to get tax breaks but not giving money to struggling charities.

Still, struggling charities shouldn’t see the report’s findings as a reason to give up on DAFs, said Vance-McMullen, who noted that they have historically been reliable during the giving season.

“In regards to the season of giving,” he said, “this report doesn’t give me pause about reaching out to donor-advised funds for year-end gifts.”

Digging into the data

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The report’s data comes from 1,140 DAF sponsoring organizations, including national commercial sponsors, community foundations and single-issue sponsors, such as universities or religious groups. Groups are asked to provide fiscal year data, and some fiscal years end on June 30, so the data spans about 18 months and includes some data from 2022. That may explain why contributions fell so sharply, according to Vance-McMullen.

“We see a bear market between January and October 2022,” he said. “And while we’re starting to recover at the end of the calendar year, we’re still feeling that effect in terms of people’s contributions to donor-advised funds.”

The National Philanthropic Trust agrees. A spokeswoman said via email that the decline was due, in part, to “donor responses to poor economic conditions in the first part of the reporting period.”

While the total amount provided in grants drops from $55.5 billion in 2022 to $54.8 billion in 2023, that is in real dollars. The figure does not take into account the 4.1% inflation rate in 2023.

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Assets in the DAF will grow from $228.9 billion in 2022 to $251.5 billion in 2023. This growth may be why the number of grants that are not adjusted for inflation will not decrease significantly in 2023, said Mitch Stein, chief strategy officer at Chariot, which advises donors. fund payment company.

“It says to me that people see DAF accounts that are performing well,” said Stein. “So people are still giving quickly.”

The payment rate for DAF, which the report defines as “this year’s grant divided by last year’s total assets,” remains flat: 24.1% in 2022 to 23.9% in 2023.

However, the pay rate and other reporting data raise red flags, said Chuck Collins, program director at the Institute for Policy Studies, a think tank.

“We’re talking about a quarter of a trillion dollars that are not immediately flowing in a timely manner to active nonprofits,” he said. “This tells us that funds are being saved.”

Grants from DAF vary according to the type of sponsoring organization. National sponsoring organizations, such as Vanguard Charitable and Fidelity Charitable, saw grants from DAFs decrease by 7%, while grants from community foundations increased by 3.1%.

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“It tells us that community foundations are doing their jobs,” Collins said. “He moved the money.”

The report also notes that the average DAF account size will increase from $129,000 in 2022 to $141,000 in 2023. Collins, Stein and Vance-McMullen all say the numbers may be slightly skewed because the dataset is large and likely includes outliers.

“A lot of these large aggregate national numbers are influenced by the largest donor-advised fund and the largest donor,” Vance-McMullen said. “We know that most donor-advised funds are small in size.”

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Rasheeda Childress is senior editor for fundraising at the Chronicle of Philanthropy. This article was provided to The Associated Press by the Chronicle of Philanthropy as part of a partnership to cover philanthropy and nonprofits supported by the Lilly Endowment. Chronicle is solely responsible for its content. For all AP philanthropy coverage, visit https://apnews.com/hub/philanthropy.

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