Donor-advised funds (DAF), highly active and popular philanthropic vehicles, experienced significant growth in FY21, with both fundraising and grantmaking activity increasing considerably for a second consecutive year.
Endowed and non-endowed assets
Smaller, emerging, and growing community foundations that may be focused on asset growth typically have a relatively high proportion of endowed assets. Larger community foundations, with an increased focus on diversifying their portfolios and providing flexible options for donors to engage in philanthropy, are more likely to have a higher proportion of pass-through funds.
Median percentages for the proportion of assets that are endowed and non-endowed may not add up to 100% due to rounding. (n=158)
Larger community foundations tend to manage more DAFs than their smaller counterparts, as they seek to grow their donor bases and provide services to those donors to facilitate their participation in locally-focused philanthropy.
Averages were used to total 100 percent. (n=157)
|Size of Foundation||Donor-advised funds||Discretionary funds||All other funds|
Total donor-advised fund assets, gifts, and grants
DAFs are highly active philanthropic vehicles within and beyond community foundations. (n=157)
Donor-advised fund flow rate
Roughly 20 percent of all Annual Survey respondents reported DAF flow rates of over 100 percent, granting more from their DAFs than those funds brought in as gifts. The "flow rate" of DAFs compares a given year's grantmaking total with its gift total, dividing grants by gifts. This metric may help capture the activity of donors who contribute to their DAF and grant from it that same year. (n=147)
DAFs at community foundations tend to be highly active grantmaking vehicles; more than one-third of all respondents reported distribution rates from DAFs in excess of 10 percent. With typically higher proportions of pass-through funds available for granting, larger community foundations tend to report higher distribution rates overall.
Sample size for DAF distribution rates are slightly smaller (n=157) than for the whole foundation (n=193).
|Size of Foundation||Donor-Advised Funds||Whole Foundation|
|$25M - $50M||7%||4%|
|$50M - $100M||5%||4%|
|$100M - $250M||9%||6%|
|$250M - $500M||10%||8%|
Inactive donor-advised funds policy
Nearly 75 percent of all annual survey respondents have a policy in place to activate "dormant" DAFs, defined by the passage of a predefined time horizon without the recommendation of a grant. (n=187)
How many years until a DAF is considered inactive?
Virtually all respondents said they considered a DAF to be dormant if no grant is recommended within five years, with 80 percent considering a DAF inactive after three years. In the extent to which there are cases where the time horizon extends to 10 or more years, it is likely to be a case of where a donor intends to build a fund balance to activate the fund toward more impactful grantmaking in the future (10 or more years). (n=136)
Steps taken to address inactive donor advised funds
Over 80 percent of respondents said that they will first attempt an appeal to a DAF holder to activate the fund after a predefined period of time after which the fund is considered dormant. Follow-up step are often included in the donor's original fund agreement; many said that those steps included one or both of distributing DAF dollars in alignment with the donor's original intent and transferring the funds into the community foundation's unrestricted funds. (n=175)