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Donor-advised funds gain prominence

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About $1.3 billion of the $2.1 billion in grants made by community foundations in 2007 came from donor-advised funds, says a report by the Council on Foundations.

Donor-advised funds enable a third party, usually a community foundation, to manage and distribute donations to charitable causes of the donor’s choice.

The funds allow donors to get tax benefits for their charitable contributions while avoiding the expense and hassle of establishing a foundation.

Donor-advised funds comprised about a third of the $50 billion in total assets held by community foundations in 2007, and made up 62 percent of their grantmaking.

And for those community foundations with more than $1 billion in assets, donor-advised funds made up 43 percent of assets and 73 percent of grant funds.

Community foundations managed more than half the estimated $31 billion held in donor-advised funds.

A total of 20,928 donor-advised funds were held by community foundations in 2007, a 15 percent increase from the previous year.

Donor-advised funds held by community foundations paid out 16.4 percent of their assets in grants and overhead in 2007, more than three times the 5 percent payout-rate standard for other funds.

More than half the grant dollars from donor-advised funds went to support education or human services, the study says.

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