Recovery seen for donor-advised funds

Eileen Heisman
Eileen Heisman

After sustaining big hits in the wake of the recession, donor-advised funds in the U.S. saw a rebound in 2010, but have yet to regain their peak asset and contribution levels, a new report says.

Assets held by the 168,873 donor-advised funds analyzed grew to $29.96 billion in fiscal 2010, up 12.3 percent from 2009, and now are within striking distance of the 2008 high of $30.1 billion, says the report from the National Philanthropic Trust.

Contributions to these funds shot up 25.3 percent to almost $7.8 billion, but remain well below the $9.3 billion logged in 2008.

Given that contributions to donor-advised funds tend to follow the direction of the stock markets, although one year later, the strong showing is expected to continue.

“As the Dow Jones Industrial Average rose from 2008 to 2009, donor-advised-fund contributions followed suit between 2009 and 2010,” Eileen Heisman, CEO of the National Philanthropic Trust, says in a statement. “It is encouraging to note the Dow Jones Industrial Average’s recent upward trajectory suggests continued growth for donor-advised funds in 2012.”

Grants from donor-advised funds held steady throughout the recession and grew 1.3 percent in 2010 to a total of almost $6.2 billion.

While that increase is fairly modest, the share of assets paid out in grants by donor-advised funds averaged 17.1 percent in fiscal 2010, eclipsing the mandated 5 percent of assets private foundations are required to award.

“With a payout rate of more than 16 percent a year since 2007, donor-advised funds are an integral component to funding the United States nonprofit sector,” the report says.

And at current levels, it says, grants from donor-advised funds represent about 3 percent of all charitable donations in the U.S.

The surge of contributions to donor-advised funds, recovering stock markets and modest growth in grantmaking combined to help the value of the average donor-advised fund grow to over $185,000 in fiscal 2010, up 12.4 percent over 2009.

Based on early indicators, and barring another major economic upheaval, the report says, 2012 could bring “historic highs in all areas.”

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