This in-depth breakdown analyzes the key 2023 statistics just released by Fidelity Charitable, the largest DAF in the world
Fidelity Charitable, the largest Donor Advised Fund in the world, has just released their full year financial highlights for 2023, which is a treasure trove of insights on the DAF market and latest trends. In addition to being the largest DAF provider by assets, grants and number of accounts, Fidelity Charitable also provides the most disclosure on DAF account activity among the major DAFs.
We’ve taken the extra steps of examining year-over-year changes in key statistics and highlighting first-time disclosures - here’s what you need to know:
1. Total distribution volume hit a new record, although year over year growth decelerated
A record $11.8 billion was granted to nonprofit organizations in 2023 through 2.3 million grants. This is a 5% increase from 2022, which is a slower rate of growth than last year’s 9%. This is somewhat surprising in a year when the S&P 500 was up 24% - typically a strong indicator of DAF usage & activity. Perhaps part of the reason that this stock market performance didn’t translate directly to distribution totals is because so much of the market rally took place just in the fourth quarter (There was an 11.7% increase in Q4).
For comparison, the overall DAF market distributions grew 9% in 2022 year-over-year (according to the National Philanthropic Trust 2023 DAF Report) when the S&P 500 was down (20)%. Overall distributions grew 35% in 2021 when the S&P 500 was up 28.7%. Other early signs of DAF activity in 2023 that have been released include a 31% increase in distributions from Schwab Charitable and a 179% increase from newcomer Daffy. The full industry statistics won’t be reported until the fall of 2024, so we’ll learn then which of these providers were most indicative of the overall market vs. an outlier.
2. Total accounts and number of donors hit record highs
Fidelity Charitable had 197,834 Donor Advised Fund accounts in 2023 utilized by 322,139 donors. These figures were up 7% and 6%, respectively, similar to the growth rates seen in 2022. These figures are also a helpful indicator of the total number of people using DAFs across the industry - if Fidelity has 1.6 donors per account, on average, that means there could be as many as 3.25 million donors using the 2 million DAF accounts across all 1,151 DAF providers (according to the National Philanthropic Trust 2023 DAF Report).
3. 54% of contributions were made with publicly traded securities in 2023, up from 45% in 2022
This is the biggest year-over-year change in the entire report with the percentage of contributions into DAF accounts made with publicly traded securities rising 9 percentage points. One of the primary benefits of DAFs is the tax advantages of contributing appreciated assets - avoiding capital gains and taking the full value as a write-off. So in a year where equities were up over 20%, we would expect people to be taking advantage of this dynamic. It’s also a primary benefit of DAFs like Fidelity Charitable that they can easily liquidate non-cash assets so grants are all made in the form of cash to nonprofits, a much more streamlined process than receiving appreciated non-cash assets directly.
4. A record 198,672 unique nonprofits were supported in 2023
The number of unique nonprofits supported with DAF grants from Fidelity Charitable grew by over 5% year-over-year, reaching a record high of nearly 200,000 in a single year.
5. Nearly 80% of DAF grants were recurring or regrants in 2023
DAF donors are known for being consistent and reliable sources of funding for the organizations they support. 78% of grants made in 2023 went to organizations the donors had supported in the past through their DAF, 47% from regrants and 31% from scheduled, recurring gifts. This is up from 77% in 2022.
6. Median account size increased by over 9% to $21,267 after years of steady decreases
There has been a long-term trend in the DAF market of average and median account size decreasing overtime as the number of DAF accounts has expanded sharply and the demographic of account holders grows to include more every-day philanthropists. This trend was clearly outweighed at Fidelity Charitable this year by the strong market performance.
7. $22.2 billion additional dollars has been generated for charity through DAF investment growth
One of the key benefits of keeping money intended for future donations in a tax-advantaged account like a DAF: since DAFs are invested in the market, your giving capacity increases with the market and 100% can go to nonprofits since that growth is tax-free. Fidelity Charitable’s investment growth has generated an additional $22.2 billion dollars for charity since inception.
8. The distribution of account size shifted with increases in medium and large accounts
The percentage of accounts with less than $25,000 fell from 56% in 2022 to 53% in 2023. Accounts with between $25,000 and $250,000 made up 37% (vs. 35% in 2022) and accounts greater than $250,000 made up 10% (vs. 9% in 2022). The strong performance in the stock market, especially late in the year, clearly translated to larger accounts across the board.
9. Average grant size decreased slightly to $4,625
The average grant size of $4,625 in 2023 was down 4% year over year, after several years of steady growth. This is still 23x as large as the average online credit card donation of $204, according to the Blackbaud Institute Charitable Giving Report.
10. Average number of grants per account stayed at 11.8
DAF donors are known for being more engaged in philanthropy and much more frequent donors. Fidelity Charitable accounts make an average of 11.8 grants per year, which is 6x the average rate of donation by donors in the overall population of 2x per year, according to Double the Donation.
11. Only 4% of grants are made anonymously
A common concern about Donor Advised Funds is that they can be used for anonymous giving. However, the vast majority of grants are not made anonymously at Fidelity Charitable and that is consistent with other industry-wide estimates of 4.3%, according to the American Enterprise Institute.
12. 88% of accounts were active in 2023
DAF donors are proven to be actively engaged in philanthropy and 88% of accounts are actively used each year at Fidelity. This number is consistent with 2022 figures.
13. 41% of contributions to Fidelity Charitable DAFs are granted out to nonprofits within 1 year, an acceleration from 2022
The lack of a mandated annual payout rate from DAFs is the leading criticism of the vehicle (like the 5% payout requirement for Foundations). But in practice, DAFs are used to more quickly move money to charity with 41% of dollars contributed to Fidelity Charitable DAFs granted out to a nonprofit within 1 year - this is up from 39% in 2022. By year 5, that figure rises to 76% and 89% by year 10.
14. 3 Chariot Advisory Council members on top 20 supported orgs list
Each year Fidelity discloses the 20 nonprofit organizations that received the most DAF grant volume and this year, 3 of Chariot’s Advisory Council members' organizations made the top 20!
Pan-Mass Challenge (Where Michele Sommer serves as the CFO), American Cancer Society (where Jay Jump serves as the SVP of Digital Product) and International Rescue Committee (where Carlos Pena serves as the Director of Donor Advised Funds).
15. Fidelity Charitable provided disclosure around corporate utilization of DAFs & DAFs as an employee benefit for the first time
Fidelity Charitable now manages 511 corporate Donor Advised Funds which granted $256 million in 2023. The average grant size was $10,932 across 23,401 grants and each corporate DAF made 65 total grants on average over the course of 2023.
They also mentioned employee DAFs and DAF contributions as an employee benefit for the first time: “In addition to using a Giving Account to facilitate corporate donations, some companies are now offering donor-advised funds to their employees as a benefit to support their individual giving.” Corporate & Employee Benefit DAFs are likely to be a tremendous driver of DAF account growth in the coming years as they go more mainstream like this.
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