The National Philanthropic Trust releases an annual summary of data it tracks about donor-advised funds in the U.S. For 2017, the estimated total in grants from this type of giving vehicle topped $19 billion, or equivalent to approximately 5 percent of the total charitable giving that year. [Full disclosure: I am one of the analysts who assists with National Philanthropic Trust’s report. We use data from more than 1,000 IRS Forms 990 from charities that are verified as having a donor-advised fund.]
Note that donor-advised fund grants are technically transfers from one charity (the fund itself is a charity) to another (the ultimate beneficiary), so this $19 billion is not “new money” to charitable giving. It is money that was donated last year or the year before or maybe five years ago, that went to ultimate beneficiaries in 2017. In fact, donor-advised funds have payout rates of around 20 percent of the prior year’s assets, and have had for at least a decade. This vastly exceeds the “minimum payout” required at private foundations of five percent of assets.
For those in the nonprofit sector, raising funds from people with donor-advised funds is akin to working with individuals whose family has established a philanthropic foundation. In both cases, the money has been given to a charitable organization and remains invested while the decision-makers assess the opportunities and determine where best to allocate it.
Nearly a century ago, community foundations began using donor-advised funds as a method to help donors plan their charitable giving. Since 1992, donors have had the opportunity to create a donor-advised fund at their local community foundation, a separate national fund (such as the National Philanthropic Trust or one of about 50 other such groups), or with one of the hundreds of issue-focused charities that make this option available.
Our job, as fundraisers, is to present the case for why our organization merits a gift. It is up to the donor to determine how he, she, or they want to make the gift (foundation, check book, stock transfer, allocation from a donor-advised fund, etc.). Focus on your case for support and on finding people who are highly likely to care about the work you are doing. Where they keep their philanthropic assets is not as important as how effective your organization is in delivering on its commitment to a better world.