More Evidence DAFs Serve as Powerful Giving Vehicles

More Evidence DAFs Serve as Powerful Giving Vehicles

May 19, 2021 Elizabeth McGuigan

A recent piece by Jeff Hamond in Bloomberg Tax effectively articulates the case against new restrictions on donor-advised funds (DAFs). In his aptly titled opinion piece, “Donor-Advised Funds Are the Linchpin of Local Charitable Giving,” Hamond points to many of the benefits that DAFs offer to givers and to the charities they support. As we have covered here before, these personal charitable giving accounts offer flexibility for donors to choose when and how to distribute funds to charities and accessibility to a wide range of individuals with low or no minimum required to open an account.

 We’ve also covered DAFs impressive payout rates in depth – and the irrational calls to impose payout mandates and other restrictions on these popular giving vehicles. Hamond makes similar points, but he also illustrates the compelling case for leaving DAFs alone by highlighting a key fact about the community foundation DAFs he represents. He writes:

According to a survey by the Community Foundation Public Awareness Initiative, which I represent, DAFs at 84 U.S. community foundations granted more than $6.7 billion in 2020. This figure represented an increase of nearly $2 billion, or 41%, from the $4.8 billion granted from that same group of foundation DAFs in 2019.

But what stands out is the fact that the $6.7 billion granted in 2020 is $500 million more than the $6.2 billion that was contributed to those funds in 2019. Put another way: community foundation DAF donors granted $1.08 in 2020 for every dollar they contributed to their funds the previous year. 

Clearly donors with community foundation DAFs have responded with astounding generosity during the COVID-19 pandemic.

What about those with DAFs sponsored by national charities like Vanguard or Fidelity? While we don’t have full data for 2020 yet, we can look to pre-pandemic levels from 2018-2019. According to the National Philanthropic Trust, donors contributed $23.81 billion to DAFs at national charities in 2018. In 2019, they granted out $17.57 billion. So for every dollar contributed in 2018, donors distributed 74 cents to charities in 2019. One can imagine the figures for national sponsors are even more compelling during the 2019-2020 time frame, as DAF grants surged. While there is certainly value to allowing funds to appreciate within DAFs, this is a far cry from the “stockpiling” label critics place on DAFs.