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  • Writer's pictureDrew Schneider

Breaking Down the Donor Advised Fund Market In 2022

We’ve analyzed all the data from National Philanthropic Trust’s 2023 annual report on Donor Advised Funds - here’s what you need to know


The greatly anticipated National Philanthropic Trust (NPT) annual report for 2023 was released on Tuesday November 14, shedding light on the state of the DAF market in calendar year 2022.


Since 2007, NPT has been the leading source of data and insights on Donor Advised Funds. This year’s report includes data from all 1,151 active DAFs in the United States. We’ve reviewed and analyzed the report and here’s what we’ve found.


 

Top Takeaways

  • DAF grants, contributions and number of accounts all hit new record highs

  • The year-over-year growth rates did decelerate across aggregate indicators after multiple years of 20+ % growth. This appears to be a normalization after breakneck growth during the pandemic

  • Poor stock market performance in 2022 clearly contributed to the deceleration, but did not deter continued growth in grants & contributions

  • Despite market pressure, payout rates remained above 20% - which is why even though Private foundations hold 5x as many assets, they only granted 2x as much as DAFs!


 

DAF Grants & Contributions

DAF Grants, the amount of money that left DAF accounts and were donated to nonprofit organizations, reached a new record high of $52 billion in 2022, 9% higher than 2021. This figure has increased every year since 2009 and has more than doubled in the past 5 years.


Contributions into DAF accounts also reached a record annual high of $86 billion in 2022, 9% higher than 2021. The fact that DAF grants and contributions are still growing more than any other type of giving in 2022 with serious downturns in major stock market indices, points to the resilience and stability of DAFs in supporting the nonprofit sector.


This adds to deeper research done by The University of Pennsylvania and The University of Memphis which shows that even in more serious recessions, like in the Great Recession of 2008-2009, DAF giving increased while all other forms of giving decreased in the same time period.


 

DAF Assets

The total amount of assets in DAFs at the end of 2022 was $229 billion, a very slight decrease from the record high in 2021 of $234 billion. Given most DAF balances are invested in the public markets, the value is highly correlated to market performance. The size of contributions clearly offset the decline in market value to maintain a very similar total asset value year over year.


These figures can be volatile year to year because of this market exposure, so it’s important to also look at the longer term trends - the total assets in DAFs have grown 85% over the past 5 years as more people appreciate their benefits and more providers offer accessible solutions.


 

DAF Payout Rates

The average DAF payout rate in 2022 was 22.5%, which is down from 28.7% in 2021. The DAF payout rate has been above 20% in every year since 2007 when NPT began tracking DAF data, but fluctuates year to year between 20 & 28.7% (2021 was the highest rate on record).


It’s most interesting to compare DAF payout rates with private foundations which hold 5x as many assets as DAFs ($1.6 trillion vs. $229 billion in 2022), but only pay out 2x as much as DAFs each year ($100 billion vs. $52 billion in 2022).




 

DAF Accounts

There are now 1.95 million DAF accounts in the U.S. - a 3% increase vs. the upwardly revised 2021 figure. There are an average of 1.6 people using each DAF account (spouses or families often share a single account), which means over 3 million people are using DAFs now!


The average DAF account size is now $117,466, down 4% from 2021. The declining average account size is consistent with the trend we’ve seen over many years of average account size declining as a broader cross section of the population takes advantage of the benefits of DAFs beyond just ultra high net worth individuals.


 

Comparing DAF Providers


There are now 1,151 DAF providers in the U.S. that fit into 3 main categories:


73 National Charities (e.g. Fidelity Charitable)

  • This group has the largest share of DAF balances ($163 billion), accounts (1.77 million) and grants made ($35 billion) and are mostly affiliated with a financial institution that offers DAFs as a part of their product suite.

  • These providers cater to a wider range of DAF holders and have played the biggest role in democratizing access to DAFs by making them more accessible - both from a pricing and technology perspective. The average DAF account at these institutions is $86,194.


725 Community Foundations (e.g. Silicon Valley Community Foundation)

  • This group accounts for $54 billion in DAF assets and $12 billion in grants. Grants were up considerably (27% vs. 2021), but contributions were down 19%, which contributed to the 10% decrease in assets vs. 2021.

  • Community foundations typically cater mostly to larger donors, with an average account size of $547,658, but this has also been moving steadily downward in recent years as DAFs have become more popular (-14% vs. 2021).


353 Single-Issue Charities (e.g. Jewish Communal Fund (JCF) )

  • This group accounts for $22 billion in DAF assets and saw greatly increased activity in both grants and contributions: Grants were $6 billion, up 19%, and contributions were $10 billion (+33%)

  • There are 77,780 accounts at Single-Issue Charities with an average account size of $281,046 and the highest payout rate of the 3 categories at 26.1%.


 

Conclusion


What does all this data mean for donors, nonprofits and technology providers?


Donor Advised Funds have always been an easy and effective tool for people to engage with their philanthropy in a more intentional and tax-advantaged way. What is new is that there has been a proliferation of DAF providers that meet an incredibly wide range of needs and interest areas for all kinds of donors. That includes more DAFs specific to certain communities or cause areas, technology improvements that make DAFs more accessible and offerings that make it more affordable.


Especially in comparison to the costs & burdens of setting up a private foundation, DAFs have become a no-brainer for the vast majority of philanthropists. This has resulted in more major donors doing more of their charitable giving through DAFs, while more “mid-market” givers are also able to take advantage of DAFs. The continuation of these two trends has kept total DAF assets at near record highs while funds in and out of DAFs keep hitting new records every year.


DAF giving has reached such a large scale, with such consistent growth year after year, that nonprofits and their technology providers simply can not afford to ignore this channel any more. It can’t wait.


Historically fundraising platforms have not had any way to include DAF giving and nonprofits just passively received checks in the mail from DAFs ad hoc. This generates the following key problems:


  1. Limited number of places a DAF donor can give

  2. Sending DAF donors through a long process to make gifts in their DAF platform - which does not obsessively optimize for maximum donation size

  3. Zero transparency for a nonprofit on when DAF gifts are made, who made them and where they are in process.


This is exactly why Chariot was built in the first place - because nonprofits need a solution for DAF fundraising that’s in their hands and solely focused on their needs. By incorporating 3-click DAF giving into any giving experience, nonprofits will convert larger DAF gifts, discover more DAF donors, better steward those donors and streamline internal processing to avoid risks of lost gifts.


Sign up for a demo of Chariot today - because it can’t wait.

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