Growth in Recent Years
Donor-advised funds grew robustly in total assets under management in 2011 and showed strong increases in annual contributions. Grants from donor-advised fund accounts rose and the number of accounts stabilized. Over the course of the past year, these changes returned donor-advised fund metrics to or substantially above pre-recession levels. In 2011, donor-advised funds reached an all-time high for assets under management and grants.
Number of Donor-Advised Fund Accounts Saw Healthy Increase
The number of donor-advised fund accounts increased by 4.2 percent in 2011, to 177,357 (Figure 1). This is the first rate of increase above 2 percent since 2008. The number of donor-advised fund accounts at Single-Issue Charities stabilized; Community Foundations increased by 4.5 percent; and National Charities increased at a slightly slower rate, at 4.4 percent.
Donor-Advised Fund Assets Grew 17.5%, Approached $40 billion
Assets under management in all donor-advised fund accounts totaled $37.43 billion, an all-time high (Figure 2 and Table 1). The reasons for this growth cannot be determined solely by the data, but changes in other metrics are certainly contributing factors. The changes in other metrics that impact total assets include a 4.2 percent growth in the number of funds, a 10.6 percent increase in contributions and a slightly lower payout rate (grantmaking).
For at least some charitable sponsors, improved asset growth from investment returns—when compared to prior years—is also a contributing factor to the growth in assets under management.
Contributions to donor-advised fund accounts in 2011 totaled $9.64 billion, also an all-time high, surpassing the 2007 value of $9.5 billion by $114 million (Figure 3). As noted, these contributions account for 3.2 percent of all charitable giving in the United States in 2011.
Grant Total Reaches New High
Grants from donor-advised fund accounts reached a new high at $7.70 billon (Table 1 and Figure 4). The growth rate compared to 2010 grants, which totaled $6.78 billion, is 13.6 percent.
Average Donor-Advised Fund Account Size
The 2011 average donor-advised fund account size reached $211,067, which is also an all-time high (Figure 5). The growth in average account size follows a 10.6 percent increase in contributions and a 4.2 percent increase in the number of donor-advised fund accounts for the same year. These figures indicate that donors added to existing donor-advised fund accounts more so than donors created new donor-advised fund accounts.
Payout rates from 2007 through 2010 exceeded 16 percent in each year. This level of grantmaking often resulted from donors who wanted to give generously through challenging economic times. For 2011, the payout rate slowed slightly to 17.1 percent. This decrease reflects the rapid rise of assets in donor-advised fund accounts and a more modest rise in grants from donor-advised fund accounts.
In contrast, the payout rates at a typical private foundation hover around 5 percent including overhead--the minimum required by law--although some foundations have granting policies to ensure a higher payout rate. Donor-advised fund payout rates do not include overhead.
Donor-Advised Fund Metrics Compared with the Dow Jones Industrial Average
Contributions to donor-advised fund accounts—but not grantmaking from them—fluctuated with the Dow Jones Industrial Average (DJIA) between 2007 and 2011, with a one-year lag. That is, the DJIA fell sharply between 2007 and 2008, but the corresponding sharp drop in contributions to donor-advised fund accounts was the following year from 2008 to 2009. The DJIA rose from 2008 to 2009 by 18.8 percent—and contributions to donor-advised fund accounts increased from 2009 to 2010 by 36.2 percent, based on the expanded data in this edition. The DJIA increased by 5.5 percent (before adjusting for inflation) in 2011, while contributions to donor-advised fund accounts rose 11.2 percent.
In contrast to contributions, grantmaking from donor-advised fund accounts fluctuated between 2007 and 2010 and did not mirror the DJIA. When the market was down dramatically in 2008, grantmaking from donor-advised fund accounts actually increased. Like contributions, grantmaking from donor-advised fund accounts declined between 2008 and 2009, but the drop in grantmaking was substantially smaller at just 8.9 percent, compared with a 27.4 percent drop in contributions in 2009 (Figure 7).