Donor-advised fund assets top $250 billion, but report says gifts in and out of the funds are down

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

The 2024 DAF Report looked at the DAF landscape using data for the 2023 fiscal year. While contributions to and grants awarded from DAFs were both down, assets held within the funds grew 9.9% to $251.5 billion, according to the report.

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

While some fundraisers might look at the new data and think it’s an indication of a decline in the popularity of DAFs, that’s not what Danielle Vance-McMullen sees.

“I don’t think what we’re seeing is a cooling donor base,” said Vance-McMullen, one of the founders of the DAF Research Collaborative. “I think we’re seeing what we’ve seen historically in donor-advised funds: When the stock market is struggling, contributions to donor-advised funds decrease. Luckily, grants from donor-advised funds are relatively resilient.”

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

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

“In terms of giving season,” she said, “this report doesn’t give me any pause in terms of approaching those donor-advised funds for year-end gifts.”

Digging Into the data

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 were asked to provide fiscal year data, and some fiscal years end June 30, so the data spans roughly 18 months and includes some data from 2022. That likely explains why contributions fell so significantly, according to Vance-McMullen.

“We saw a bear market between January and October 2022,” she said. “And while it started to recover by the end of the calendar year, we were still feeling those effects in terms of people’s contributions into their donor-advised funds.”

The National Philanthropic Trust agrees. A spokesperson said via email that the decrease was due, in part, to the “donor response to adverse economic conditions in the first part of the reporting period.”

While the total amount doled out in grants declined from $55.5 billion in 2022 to $54.8 billion in 2023, that was in real dollars. The figures do not account for the 4.1% inflation rate in 2023.

Assets in DAFs grew from $228.9 billion in 2022 to $251.5 billion in 2023. This growth is likely why the non-inflation-adjusted grant total didn’t decline much in 2023, said Mitch Stein, head of strategy at Chariot, a donor-advised funds payment company.

“It says to me that people saw their DAF accounts were performing well,” Stein said. “So people still gave at a consistent pace.”

The payout rate for DAFs, which the report defines as “this year’s grants divided by last year’s total assets,” remained relatively flat: 24.1% in 2022 to 23.9% in 2023.

However, the payout rate and other report data raises red flags, said Chuck Collins, program director at the Institute for Policy Studies, a think tank.

“We’re talking about a quarter trillion dollars that is not flowing immediately in a timely way to active nonprofits,” he said. “This tells us that funds continue to be warehoused.”

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

“That tells me that the community foundations are doing their job,” Collins said. “They’re moving the money.”

The report also noted that the average DAF account size rose from $129,000 in 2022 to $141,000 in 2023. Collins, Stein and Vance-McMullen all said that number may be somewhat skewed because the dataset was big and likely included outliers.

“A lot of these big aggregate national numbers are influenced by the biggest donor-advised funds and the biggest donors,” Vance-McMullen said. “We do know that most donor-advised funds are modest in size.”

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