How The Chronicle’s Annual Survey of Donor-Advised Funds Was Compiled

The Chronicle collected data from 105 of the nation’s gift funds, community foundations, and other

nonprofit groups to conduct its ninth annual survey of donor-advised funds.

Donor-advised funds allow people to donate cash, stock, or other assets to special accounts, claim a tax deduction for the gifts, and determine how, when, and to which charities money in the account should be paid. Many donors prefer this method of charitable giving to establishing their own private foundations.

At the funds surveyed, assets grew by 25 percent from 2006 to 2007, reaching a total of $23-billion. That change marks a better growth rate than the 21 percent increase from 2005 to 2006.

Assets grew by more than 100 percent at the Christian Legacy Foundation, in Tampa, Fla., an affiliated entity of the National Christian Foundation that helps donors convert assets that are difficult to value, such as businesses owned by just a few shareholders, into donor-advised funds. Assets also more than doubled at the Liberty Hill Foundation, in Santa Monica, Calif., where a couple created a donor-advised fund with $2.8-million rather than start a foundation. Their gift accounted for more than half of last year’s growth at the small foundation.

Assets fell at 10 groups last year. In some cases, the declines occurred because donors made very large gifts from their funds or spent all the money in their funds after accomplishing a specific purpose, such as helping survivors of the 2001 terrorist attacks.

Survey results were based on information provided on a Chronicle questionnaire by 43 community foundations, 18 commercial investment companies, 12 Jewish federations, 11 colleges and universities, and 21 other groups, such as religious, international, or social-service charities.

The Chronicle requested participation from all organizations known to offer donor-advised funds, with the exception of community foundations. The community foundations included in the Chronicle survey were among the 50 such groups that raised the most money in 2007, based on an annual study by the Columbus Foundation, in Ohio.

Because the federal government for years did not require donor-advised funds to disclose much information to the Internal Revenue Service, The Chronicle’s survey has relied on data from the charities themselves. However, beginning in 2006, the Internal Revenue Service’s Form 990 began to ask charities to disclose the amount they collected for their donor-advised funds.

Data from that form provide the information on a new table in this year’s special report, listing total amounts donated to donor-advised funds in the 2006 fiscal year. Such information was available for this year’s survey only for those groups with a fiscal year ending December 31, 2006.

Readers should take care when comparing data from different organizations, and even within the same organization from year to year. Several groups responded on their surveys that their data — in 2006, 2007, or both years — were somehow affected by the Pension Protection Act of 2006, which sought to define donor-advised funds for the first time.

The survey of donor-advised funds was compiled by Noelle Barton, Maria Di Mento, and Candie Jones.