Survey Finds Rapid Rise in Assets and Grants of Donor-Advised Funds

Assets at many of the nation’s largest donor-advised funds grew to $10.2-billion last year, and the funds made $1.4-billion in grants to charitable groups, according to a Chronicle survey.

The figures reflect the activity of a sampling of 67 donor-advised funds, including nine offered by nonprofit groups set up by commercial investment companies and 44 by community foundations.

In a donor-advised fund, donors can give cash, stock, or other assets, claim a charitable deduction on their income-tax returns, and then recommend how the money in the fund should be distributed to charities. The donated funds are invested in the financial markets so they can keep growing.

The survey, The Chronicle’s second examination of donor-advised funds, shows significant growth in assets and grants. Among 57 organizations that provided The Chronicle with asset totals for their donor-advised funds in both 1999 and 2000, the value of the funds rose 29 percent. The total amount of grants awarded increased 39 percent for the 56 donor-advised funds that provided giving information for both years.

The number of donors setting up such funds at the groups in the survey increased 33 percent, from 27,902 in 1999 to 37,058 last year. More than 70 percent of those new funds — 6,525 — were created at the Fidelity Investments Charitable Gift Fund.

$2.4-Billion at Fidelity

The 2000 figures continue a growth trend among donor-advised funds that dates back at least to the mid-1990’s. In last year’s survey, assets among a sample of organizations with donor-advised funds had more than tripled from 1995 to 1999 (The Chronicle, April 20, 2000).

By far the biggest group offering donor-advised funds is Fidelity’s gift fund, which had $2.4-billion in assets at the end of its fiscal year on June 30, 2000. Fidelity accounted for one-fourth of the total assets of the organizations in the survey. It made $574-million in grants to charities from its donor-advised funds, more than 40 percent of all giving by the groups in the survey.

And Fidelity’s growth continues unabated. The $700-million it added in assets from 1999 to 2000 was the largest annual increase since it was created in 1992, and accounted for a third of the total asset growth of all the funds in the survey.

Community foundations and Jewish federations, which have long offered donor-advised funds, accounted for the bulk of the rest of the assets in the Chronicle survey.

The community foundations that provided information had a total of $4.1-billion in assets and made grants totaling $582-million.

United Jewish Communities, an umbrella group representing Jewish federations around the country, estimated that the total donor-advised fund assets of the federations came to $2.2-billion. It could not say how many of the federations have donor-advised funds, or provide a figure on their total grant making.

Fast-Paced Growth

The biggest percentage asset growth among those in the survey was reported by the Tulsa Community Foundation, which saw the value of its donor-advised funds in 2000 grow to more than 180 times what it had been the prior year, increasing from $110,798 to $19.0-million. Phil Lakin, executive director of the foundation, said that the foundation wasn’t formed until the end of 1998, and its 1999 donor-advised fund assets represent what it was able to build up in just half a fiscal year.

The National Philanthropic Trust, founded in 1996 by Pitcairn Trust, a private investment bank located in Jenkintown, Pa., also experienced significant growth last year.

Assets rose more than 700 percent, from $27.8-million to $225.5-million. Eileen Heisman, president of the National Philanthropic Trust, said that virtually the entire increase was the result of a single $197-million gift from a donor, who directed the trust to set up a supporting organization to manage the investment and distribute grants. Supporting organizations allow donors more flexibility in how funds are distributed than do contributions made directly to a donor-advised fund controlled by a nonprofit group.

Financial Advisers

Not all the growth in donor-advised funds was the result of large contributions by individual donors. The Community Foundation for the National Capital Region, in Washington, increased the assets in its donor-advised funds by 150 percent in 2000, from $44.8-million to $112-million, as the result of a concerted effort to seek out new donors, according to Kenny Emson, the foundation’s vice president and chief financial officer. “We spent a good six months putting together a database of 400-plus financial advisers in the area, and then we met with them, either in groups or individually,” Mr. Emson said. Since then, the foundation has added 54 donor-advised funds, he said.

At the Peninsula Community Foundation, in San Mateo, Calif., donor-advised assets rose 80 percent in 2000, from $121-million to $217.9-million, while grant making from such funds more than doubled, from $26.9-million to $64.1-million.

Debbie Ford-Scriba, a foundation spokeswoman, said those increases were the result of the boom in the Silicon Valley economy that ended early in 2000, and the single-largest gift in the foundation’s history: $65-million from Frank and Wynnette Levinson. Mr. Levinson is chairman of Finisar Corporation, a fiber-optic communication-systems company in Sunnyvale, Calif.

While donations to create new funds have slowed somewhat this year as the stock market cooled, Ms. Ford-Scriba said, donors are still expressing interest in starting donor-advised funds. “People are in this for the long haul, and they recognize that not only will there be slow times, but that the clients of the charities we fund are the ones who will be most affected by those slowdowns.”