Growth in Recent Years
Donor-advised funds grew robustly in total assets under management in 2012 and showed steady increases in annual contributions. Grants from donor-advised fund accounts rose and the number of accounts rose sharply.
Number of Accounts Saw Healthy Increase
The number of donor-advised fund accounts increased by 7.0 percent in 2012, to 201,631 (Figure 1). This is the second year of rapid growth since 2008. The number of accounts at Single-Issue Charities rose by 11.4 percent; Community Foundations increased by 3.3 percent; and National Charities increased by 7.5 percent.
Donor-Advised Fund Assets Grow 18.9%, Exceed $45 billion
Assets under management in all donor-advised fund accounts totaled $45.35 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 7.0 percent growth in the number of funds, a 34.6 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 2012 totaled $13.71 billion, also an all-time high, dramatically surpassing the revised 2011 value of $10.19 billion by $3.53 billion (Figure 3). As noted, these contributions account for 4.3 percent of all charitable giving in the United States in 2012. The $13.71 billion in contributions to donor-advised fund accounts is also equivalent to 44.8 percent of the estimated giving to foundations, which was $30.58 billion in 2012.9
Grant Total Reaches New High
Grants from donor-advised fund accounts reached a new high at $8.62 billon (Table 1 and Figure 4). The growth rate compared to a revised total for 2011 grants of $8.08 billion is 6.7 percent.
Average Account Size
The 2012 average donor-advised fund account size reached $224,921, which is an all-time high and an increase of 11.2% over 2011 (Figure 5). The growth in average account size follows a 34.6 percent increase in contributions and a 7.0 percent increase in the number of donor-advised fund accounts for the same year.
Payout rates from 2007 through 2012 annually exceeded 16 percent. This level of grantmaking often resulted from donors who wanted to give generously through challenging economic times. For 2012, the payout rate slowed slightly to 16.0 percent from 17.5 the previous year. This decrease reflects the rapid rise of assets in donor-advised fund accounts and only a modest rise in grants from donor-advised fund accounts, particularly at national sponsors. 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
From 2007 to 2011, contributions to donor-advised fund accounts rose or fell in the year following an increase or decrease in the Dow Jones Industrial Average. For 2012, a 34.6 percent increase is far larger than anything that might have been expected based on the prior year’s 5.5 percent rise in the DJIA. Contributions did increase in 2010 at a similar rate—36.3 percent—following a more than 18 percent stock market surge as the country came out of recession. The strong increase in contributions in 2012 is attributable in part to rising asset values in the securities market but it is highly likely other factors came into play, as well. One possibility is the impact of the year-end “Fiscal Cliff” and the ongoing debate about the charitable tax deduction. The U.S. Congress and President reviewed numerous potential approaches to resolving long-standing budget imbalances and considered revocation of the charitable deduction, among other options, in late 2012. It is reasonable to assume that some donors wanted to make contributions to a donor-advised fund account in 2012 to ensure a charitable tax deduction for their donation at the known rate.
In contrast to contributions, grantmaking from donor-advised fund accounts does not mirror changes in 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 7.2 percent, compared with a 26.3 percent drop in contributions in 2009. For 2012, grantmaking rose by a modest 6.7 percent (Figure 7).
- Giving USA 2013