Contributions to Donor-Advised Funds Set New Record, Continue to Outpace Overall Giving

The rocket-like rise of donor-advised funds continued in 2015, easily outpacing Americans’ giving overall, but growth slowed. A record $22 billion in contributions flowed to the charitable-giving vehicles last year, an 11.4 percent increase from 2014, according to a new survey by the National Philanthropic Trust. That jump is nearly triple the 4 percent increase in overall giving in 2015.

This was the sixth straight year that the National Philanthropic Trust survey has recorded increases in all its measures, including giving to the funds, grant making, and total assets of the funds. The numbers reflect the increasing awareness and popularity of the giving approach, said Eileen Heisman, head of the trust, a national sponsor of funds.

Ms. Heisman predicted that growth would continue but cautioned that double-digit increases aren’t sustainable. The growth rate in contributions has dropped each year since 2012, when it was 35 percent. “It’s just not realistic to think there’ll be continued double-digit growth,” she said. “I’m not sure anything grows that fast.”

One part of the donor-advised fund market stepped back from its rapid growth. Funds sponsored by community foundations saw a nearly 6 percent decline in contributions in 2015.

The report attributed the drop to normal fluctuation in giving to community foundations, which are more likely than other sponsors to receive large gifts or bequests. One community foundation not named in the survey saw its giving to donor-advised funds fall in 2015 by almost half after big gifts the previous year had pushed its total to $1.9 billion.

Portrait of Dominance

Over all, the report painted a portrait of continued dominance by a small group of sponsors it calls “national charities.” Though only 48 of the 1,016 organizations in the trust’s survey fall into this set, they accounted for 57 percent of all contributions to donor-advised funds in 2015. They also saw all but about 10 percent of the growth in individual accounts.

A little more than half of these 48 sponsors have ties to commercial financial firms. The pacesetter is Fidelity Charitable Gift Fund, whose $4.6 billion in contributions in 2015 pushed it to the top of The Chronicle’s Philanthropy 400 — the first time a sponsor of donor-advised funds has claimed the No. 1 spot.

Ms. Heisman said the national charities enjoy many advantages over their peers in the battle for market share. Like Fidelity, many offer low fees and require as little as $5,000 to open a fund. Those with ties to commercial funds also benefit from extensive marketing to lists of potential customers.

“They have a vast reach,” Ms. Heisman said. “If you’re a community foundation and you’re reaching out regionally, there’s a limited pool of people from whom you can raise money.”

Data on 85 Sponsors

Though the trust’s survey does not identify individual sponsors of donor-advised funds, The Chronicle recently published information on giving, grant making, and other data about 85 of the largest organizations.

Other findings from the survey:

• Total assets in donor-advised funds reached a new record of nearly $79 billion. That’s well more than double the 2010 total of $34 billion.
• Grant dollars from the funds soared 16.9 percent to a high of $14.5 billion. The compound annual growth rate from 2010 to 2014 was only 14.5 percent.
• Rates at which the funds distribute grants slipped for the fifth year in a row, to 20.7 percent. In 2010, that rate was 24.7 percent. The report notes that the payout rate at private foundations “is usually around 5 percent,” including many expenses.