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Affluent Investor | June 29, 2017

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186% Growth in Giving to Donor Advised Funds

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Donor advised funds have come a long way since the first appearing in the early 1900s. The New York Community Trust claimed to be one of the first in 1931. For the longest time, local community foundations tended to have the corner on the market on providing donor advised funds. Yet from 2008 to 2013, there was a whopping 186% growth in donor advised funds.

In the early 1980s, the first Christian community foundations were established including the National Christian Foundation in 1982.

By 1991, Fidelity entered the scene with some of the first commercial donor advised funds. That move quickly spread with Schwab charitable and other commercial entities establishing charitable ventures.

Now it seems that everyone is offering donor advised funds. Even United Way affiliates are offering them. Colleges and universities have entered the fray including small colleges. Banks and rotaries are trying their hand at the venture. As part of this move, there are groups that offer backroom services for donor advised funds which allow any charity to offer them.

But of course not every donor advised fund entity is the same. For instance, while Fidelity is viewed as a no frills, low price leader, they offer little in the way of guidance and knowledge of charities. Some donor advised groups require 50% of their grant dollars go to the sponsoring charity while others limit how long the fund can be passed down and still others want to weigh in on what can and cannot be given to. For instance, United Way Rhode Island sweeps whatever is left in accounts at year end into their general community fund.

Not surprisingly groups like Waterstone and the National Christian Foundation serve a distinctly Christian market and their grants go to organizations consistent with those values.

Some non-profit organizations may view the rise of donor advised funds skeptically. Some perceive that donor advised funds are becoming a storehouse of cash instead of a true charitable vehicle. But on the whole, most donor advised funds are giving 10% or more of their assets each year—far beyond the 5% required of private foundations. And in the case of the National Christian Foundation, their donors distribute 30% or more of their assets each year.

What is clear from all these changes and trends is that giving to and through donor advised funds is a trend that is here to stay.

 

Originally published on William High’s LinkedIn.

 

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