Donor-advised Funds See Declines

Donor-advised funds in 2009 posted declines for the second straight year in the value of their assets, in contributions they received, and in grants they made, a new report says.

The 2010 Donor-Advised Funds Report by the National Philanthropic Trust, which examined 221 charitable organizations, also says donor-advised funds now outnumber private foundations by more than two to one, and that the total grants they made to charities in 2009 exceeded the total amount of contributions they received.

The number of donor-advised funds grew three percent to over 150,000 in 2009, representing a faster rate of growth than any other charitable giving vehicle, including charitable remainder unitrusts, private foundations, charitable remainder annuity trusts, charitable lead trusts, and pooled income funds.

The value of assets at donor-advised funds fell 12.7 percent in 2009 to $25.23 billion, representing a bigger decline than any of those other charitable giving vehicles.

In comparison, the value of assets at private foundations grew 3.3 percent in 2009 to $583.4 billion.

Grant dollars from donor-advised funds to charities totaled $6 billion in 2009, exceeding $5.9 billion in total contributions to donor-advised funds.

The report predicts donors-advised funds will rebound strongly in 2010 and 2011 and make marked gains across all areas, including assets, grants, contributions and new accounts.

The report cites several indications that donor-advised funds will show significant growth, including record contributions to the National Philanthropic Trust in the fiscal year ended June 30, a mid-year report from the Fidelity Charitable Gift Fund that report a 67 percent increase in contributions and a 19 percent increase in new accounts, compared to the same period a year earlier.

While assets in donor-advised funds may not regain their 2007 peak value of $29.4 billion, the report says, they are expected to grow significantly.

“Donor-advised funds are poised for significant near-term growth, especially if the economy continues to improve,” the report says. “In the long-term, this growth will be sustained by donors, advisors and attorneys who become more aware of the donor-advised fund and its advantages.”

Andrew Hastings, vice president for business development at the National Philanthropic Trust, says it expects a “strong recovery in donor-advised funds and market gains across assets, grants, contributions and new accounts.”

Reprinted with permission of Philanthropy Journal.