Donor Advised Funds in the US: Market Analysis
Assets in donor-advised funds in the United States totaled $85 billion in 2017. Massachusetts, Pennsylvania, and California have 142,052 registered donor-advised funds which are around half of all the donor-advised funds in the United States. Multiple trends are emerging in the donor-advised industry, such as rage philanthropy, in which individuals give to make a statement.
The National Philanthropic Trust (NPT) retains data on all donor advised funds in the US. The NPT also provides market analyses on donor-advised funds in the US. Therefore, the majority of data for this report came from the NPT's website and its reports, information on particular charitable sponsors arose from other websites.
Over the past decade, giving to donor-advised funds has increased significantly. In the United States in 2016, total contributions to donor-advised funds reached $23.27 billion, which is equivalent to 8.3% of individual giving in the United States.
Funds by assets
Charity-focused assets in donor-advised funds in 2017 totaled $85 billion. This is up 9.7% on 2016. Such large growth can be attributed to increased donations to donor-advised funds and gains on assets and investments. The increases in assets can be further subdivided by a charitable sponsor.
Between 2016 and 2017, charitable assets associated with donor-advised funds which are part of single-issue charities saw a 2.7% increase. In 2016, single-issue charity sponsors had a total of 49,620 individual donor-advised funds. In 2016, these funds held charitable assets totaling $10.67 billion.
Between 2016 and 2017, the number of funds for community foundation charities increased by 2.1%. In 2016, community foundations sponsors had a total of 69,587 separate donor-advised funds. In 2016, these funds held charitable assets which totaled $29.80 billion.
Between 2016 and 2017, there was a 10.4% increase in donor-advised funds for national charities. National charitable sponsors had 165,758 donor-advised funds which held charitable assets totaling $44.68 billion in 2016. Of all the charitable sponsors, national charities have seen the largest growth in the last ten years.
Donor-advised funds provided $15.75 billion worth of grants to registered charities in 2016. This is a 10.4% increase in grants provided from 2015, which totaled $14.26 billion. Between 2012 and 2015, the annual rate of growth in grants was 18.8%.
Size by Geography
Excluding Texas and California, the West and MidWest had less than 2,999 donor-advised funds, with the lowest number of funds in the North West (i.e., Montana and Utah). Generally, the Northern states of the Central Time Zone (i.e., Wisconsin and Illinois) had less than 4,999 funds, while the Southern states had less than 2,000. In the East Coast, Massachusetts, Pennsylvania, Georgia, New York, and Ohio each had over 10,000 funds.
Donor-advised funds are present in every state in the US, showing that there is considerable interest in these forms of giving vehicles throughout the country. There is a significant range in the total donor-advised funds in between states: there are only 28 in Puerto Rico compared to 82,643 in Massachusetts. In 2016, there was a particular focus on Massachusetts, California, and Pennsylvania in the United States for charity sponsored donor-advised funds. Alongside Massachusetts' 82,643 donor-advised funds, there are 38,590 in California and 20,819 in Pennsylvania, which equates to a total of 142,052, approximately half of the 284,937 donor-advised funds in 2016. This is due to the headquarters of multiple donor-advised fund sponsors being based in these three states.
The National Philanthropic Trust's president and CEO, Eileen Heisman, said that there was an emerging trend of "rage philanthropy." This trend is led by people who would like to make a statement about causes which they believe to be important through charitable giving.
Vanguard Charitable a notable donor-advised fund sponsor has noted a significant increase in new account registration, contributions, and grants. They have also highlighted that a significant proportion of gifts given at the end of 2016 were non-cash assets which included appreciated securities. In this same period, 80% of grants from donor-advised funds to Vanguard charitable were unrestricted. Such a trend shows that donor-advised funds are increasing their trust in charitable sponsors.
Other trends include the development of donor-advised funds to the fundraising programs of traditional non-profits such as hospitals and churches. There has also been a trend of emerging donor advised funds which are offering "white label" or collective investment funds to charitable sponsors, one example of this is the Morgan Stanley Global Impact Funding Trust.
Regarding specific trends for community foundations, there has been an overall reduction in management fees in an attempt to compete with large charitable sponsors such as the charitable arm of Fidelity Investments. There is also an increasing trend of charitable sponsors offering donor-advised funds the opportunity to be hands-on with their investments; this goes along with the general trend of donors wanting to feel as if they are part of something impactful.
In the future, we can expect to see increased involvement of millennials in donor-advised funds. This trend is not yet fully realized, however, this is expected to rapidly increase as millennials are already having a significant effect on philanthropy as a whole.
In summary, giving to donor-advised funds reached $23.27 billion in 2016. There is a range of total donor-advised funds in each state, with Massachusetts having the most and Puerto Rico having the least. There are a number of industry trends in donor-advised funds which are showing an increase in trust between donor-advised funds and charitable sponsors.