Givers kept giving despite bear market, says report on donor-advised funds

Donor-advised funds' grants to charities around the world were up 60% this year compared to pre-pandemic 2019 and have increased 400% over the past decade, according to the report.

Stocks and bonds may have suffered this year, but philanthropists did not stop giving.

The 2022 Donor-Advised Fund Report released Tuesday by the National Philanthropic Trust revealed growth in all key DAF metrics for the 12^th consecutive year. The new report also shows that DAF grant-making to charities around the world grew 60% compared to pre-pandemic 2019 and increased 400% over the past decade.

According to the report, the value of grants that DAFs made to charities around the world rose 28.2% to $45.74 billion this year, while contributions to DAFs grew 46.6% to $72.67 billion and charitable assets increased 39.5% to $234.06 billion. Finally, the report showed the number of DAF accounts was up 27.6% to 1,285,801, while the grant-making payout rate grew to a record 27.3%.

“Global events like Covid-19 and the vaccine distribution, calls for racial justice, political unrest, supply chain challenges and its impact on the economy and then a steep increase in the U.S. financial markets were some factors that motivated DAF donors to support causes important to them,” Eileen Heisman, CEO of National Philanthropic Trust, said in a statement.

Heisman added that this year’s record DAF payout bodes well for next year. Historically, when donor-advised funds experience material year-over-year increases in contributions, they tend to see “heightened and sustained grant-making to charities the following years,” she said.

“With a bear market and rising inflation putting pressure on every American, every business and every nonprofit’s budget, charities and donors alike are feeling the adverse effects of market fluctuations. It’s likely charities will find fundraising more difficult, and some donors may tighten their charitable giving budgets — whether they’re donating cash or appreciated stock,” said Jodi Rosen, director of business and product development at Vanguard Charitable.

Despite these challenges, however, Rosen believes that donors who use donor-advised funds are uniquely positioned to maintain their giving in the long-term since DAFs are positioned to be counter-cyclical. The money in a DAF is already committed for charity, so even when stocks are down and donors may not be able to contribute as much, they can continue to grant out money from their DAF.

“We saw that happen in 2008 and 2009, and we’re encouraging our donors to continue granting at steady rates, especially coming off record granting years during the pandemic,” Rosen said.

[More: Vanguard Charitable sees strong run of donations despite first-half sell-off]