Donor-Advised Fund Spotlight Summary: DAF Grant Payout Rates

Author National Philanthropic Trust

August 19, 2021

NATIONAL PHILANTHROPIC TRUST is pleased to announce the first entry in our Donor-Advised Fund Spotlight series. This Spotlight explores data related to the DAF grant payout rate, the percentage of DAF charitable assets granted each year to qualified charities. This metric measures how active DAF donors are within a specific time frame and how much they invest for future grantmaking. Using a variety of methods to calculate the DAF grant payout rate, the results of the data are clear: DAF donors have been consistently generous through even the most turbulent of social changes and economic cycles, including the Great Recession and the COVID-19 pandemic.

KEY FINDINGS

  • Grant payout rates from DAFs have been consistent for more than a decade through social changes and economic cycles.
  • DAF grant payout rates exceed those of private foundations by a factor of three to six, depending on which payout formula is used. DAFs’ charitable assets represent only about 14 percent of private foundations’ charitable assets.
  • National Charities as a sponsor type have payout rates higher than the aggregate DAF sector (24.2 percent in 2019); Community Foundations have the narrowest range of payout rates (16.4 percent in 2019) and Single-Issue Charities have the highest payout rates of all sponsor types (28.9 percent in 2019).
  • The 12-year compound annual growth rates (CAGR) of grants and charitable assets are nearly identical (13.1 percent and 13.4 percent respectively), confirming DAFs are a generous and sustainable source of support for charities.

The consistency in the grant payout rate over more than a decade and across DAF sponsor types demonstrates that DAF donors are giving at steady rates regardless of which type of DAF sponsor they choose. This is an important observation that challenges the notion that some sponsor types are “warehousing wealth.” The flexibility and reliability donor-advised funds provide makes them a powerful, change-making giving vehicle that can adapt to a shifting socioeconomic landscape. During the past two turbulent years, there has been an outpouring of charitable support towards organizations advancing change and providing relief to communities in need. It’s likely that grant payout rates will continue to rise over the next two years, as donors respond to critical issues today and prepare for future challenges.

Read the full Spotlight for more insights and data on the DAF grant payout rate.