Stunning Portrait of Donor‐Advised Funds Issued

• DOI: http://doi.org/10.1002/npc.30669
• Published date: 01 January 2020
• Date: 01 January 2020

THE LAW OF TAX-EXEMPT ORGANIZATIONS MONTHLY

STUNNING PORTRAIT

OF DONOR-ADVISED

FUNDS ISSUED

The National Philanthropic Trust, on November 12, issued its 13th annual

report on donor-advised funds, examining data for 2014–2018 from 989 spon-

soring organizations. In her letter introducing this report, NPT President and CEO

Eileen R. Heisman writes that “[o]ver the past decade, donor-advised funds have

experienced tremendous growth.” (See the Quote of the Month.)

The letter highlights three extraordinary developments. One is that “grantmak-

ing from donor-advised funds to qualified charities has nearly doubled in the past

five years.” Grants from DAFs in 2018 totaled $23.42 billion. Two, there has been

an 86 percent increase in contributions to the funds over the past five years. The

number for 2018 is $37.12 billion. Three, for the second year in a row, “there was

growth above 50 percent in the number of new donor-advised fund accounts.”

Total estimated charitable contributions in the United States in 2018 were

$427.71 billion (see the September 2019 issue). Of this amount, $292.09 billion

came from individuals (68 percent). Thus, donors to donor-advised funds accounted

for 12.7 percent of individual giving. Contributions to DAFs expressed as a percent-

age of total annual individual giving have steadily increased during 2010–2018.

There were an estimated 728,563 donor-advised funds in 2018, compared to

about 80,000 private foundations (not including corporate foundations). Assets

in donor-advised funds in 2018 had an estimated value of $121.42 billion, while

at the same time assets in private foundations had an estimated value of $872.65

billion. Yet, grants from donor-advised funds in 2018 (as noted, $23.42 billion)

equated to just over 43 percent of the estimated $54.03 billion granted by private

foundations during the year.

Contributions to donor-advised funds in 2018 increased by 20.1 percent

in relation to the total for 2017. Grants from these funds to charitable entities

amounted to an 18.9 percent increase from the total for 2017. Assets under man-

agement in donor-advised funds increased by 8.3 percent compared to the value

in 2017. The number of these funds “increased sharply,” rising by 55.2 percent in

2018. The payout rate for donor-advised funds in 2018 was 20.9 percent.

The average size of a donor-advised fund in 2018 was estimated to be

$166,653. This is a 30.2 percent decrease compared to the 2017 number

($238,857). The NPT report states that the “emergence of workplace giving

donor-advised fund accounts and sponsoring organizations that have no or low © 2019 Wiley Periodicals, Inc.

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DOI:10.1002/npc

Analysis of current developments in tax

and related law for nonprofit organiza-

tions and their professional advisors.

Volume 37 Number 1

January 2020

Also in This issue...

Tax Court Rejects Easement

Gift Deduction, Unenforceable

Savings Clause 3

IRS Getting More Aggressive

About Syndicated Easements

Enforcement 4

Other Conservation Easement

Developments 4

Nonprofit Organization Held

to Be Individual’s Alter Ego for

Penalty Purposes 4

Senate Committee Report

Summarizes Charitable

Deduction ‘Reforms’ 5

Private Benefit Doctrine Corner 6

Nonexempt Business League

Corner 6

Other Recent IRS Private Letter

Rulings 6

Comments Submitted on

Proposed Schedule B Regulations 7

IRS Updates Inflation

Adjustments for 2020 8

Other Developments 8