Donor-advised funds had another banner year in 2017 as measured by several key metrics, even as the average account size decreased due to the changing nature of charitable giving.
According to the National Philanthropic Trust’s 12th annual industry report on donor-advised funds, assets in these vehicles topped the $100 billion mark last year for the first time and ended the year with a tad more than $110 billion, which was 27.3 percent greater than in 2016.
There were 463,622 individual donor-advised funds in the U.S. through year-end 2017, a 60 percent jump over the prior year. And donors contributed $29.2 billion to these funds and used them to recommend a little more than $19 billion in grants to qualified charities. The numbers for both contributions and grants were all-time highs.
Donor-advised funds are vehicles for philanthropic giving administered by a charitable sponsor that enable donors to create and fund the account by making irrevocable, tax-deductible contributions to the charitable sponsor. Donors then recommend grants from those funds to other charitable organizations.
The report from the National Philanthropic Trust, the largest national independent donor-advised fund sponsor, found that all of the key metrics mentioned above rose for the eighth consecutive year. In addition, it said donor-advised funds constituted 10.2 percent of all individual giving in the U.S. last year, a number that has risen steadily from 4.4 percent in 2010.
But while the number of individual donor-advised funds ballooned 60 percent from 2016 to 2017 (due largely to the launch of one new donor-advised fund program), and charitable assets increased 27.3 percent in that same time, the average account size fell by 20.5 percent. Translation: there were a lot of donor-advised funds being opened with lower account balances as people—presumably millennials for the most part—utilized emerging, smaller dollar-type models for using donor-advised funds such as crowdfunding and workplace giving. Such a trend could be deemed the democratization of philanthropy.
And that highlights the obvious difference between individual donor-advised funds and private foundations. Namely, size and scope. According to the report, the 82,516 private foundations (a total less than one-fifth that of donor-advised funds) contained $855.8 billion in assets (eight times more than in donor-advised funds) and made $49.5 billion in grants (or 160 percent more than donor-advised funds).
Nonetheless, both avenues help foster the overall philanthropic mission.