Donor-advised funds (DAFs) have seen explosive growth in recent years, quickly becoming one of the most popular charitable giving tools. These tax-advantaged investment accounts have revolutionized how individuals, families, and corporations think about philanthropy. If you’ve been hearing more about DAFs and are curious about their rising prominence, look no further.
Here are six compelling statistics that highlight the insane growth of donor-advised funds.
- Astonishing Assets Under Management
As of 2021, the total assets under management (AUM) in DAFs exceeded $234 billion. This represents a significant increase from just a decade ago when AUM was around $30 billion. This massive growth showcases the increasing trust donors place in DAFs for managing and distributing their charitable funds.
- Surge in New Accounts
In the last five years, the number of individual DAF accounts has skyrocketed. By the end of 2021, there were nearly 1.3 million DAF accounts in existence, compared to just 300,000 in 2016. This growth points to the ease and convenience of establishing and maintaining a DAF.
- Average Account Size
Despite the surge in the number of accounts, the average size of a DAF account remains substantial. As of 2021, the average DAF account held approximately $182,000, underscoring the commitment and capacity of donors to contribute significant amounts to charity through this vehicle.
- Generous Grantmaking
DAFs are not just for holding assets – they play a pivotal role in grantmaking. In 2021, DAFs made grants totaling over $10 billion to charitable organizations.
- Proliferation of Sponsoring Organizations
While some of the most well-known DAFs are housed at national charitable organizations, the reality is that DAFs can be found at a variety of institutions. There are approximately 1,000 organizations in the U.S. that sponsor DAFs, giving donors more choice and flexibility.
- Increasingly Favorable Tax Benefits
A major driver behind the growth of DAFs is the favorable tax treatment they offer. Donors receive an immediate tax deduction when they contribute to a DAF, even if grants from the fund are made in future years. Current donor-advised fund deduction limits for donors are 60% for cash contributions and 30% for assets like stocks and crypto.
The meteoric rise of donor-advised funds over the past decade is a testament to their versatility, convenience, and efficacy as a charitable giving tool. As donors of all ages continue to embrace DAFs, and as charitable organizations become more attuned to this trend, the impact of DAFs on the philanthropic landscape is only expected to grow.
If you have donors that have asked about setting up a donor-advised fund, you can refer them to the team at Givepact.