Grantmaking by holders of donor-advised funds (DAFs) grew 9% in pre-inflation dollars during 2022 to a record high of $52.16 billion, accounting for one-tenth of the $499.33 billion total of all charitable giving in the United States.
The growth rate of DAF grantmaking was less than the 25% and 35% increases recorded during the previous two years, however. It also marked the first time in a decade that the growth rate fell below 10%.
“We believe we are seeing a ‘new normal’ for DAFs, meaning a return to the more modest historical growth rates than the growth we saw during the height of COVID-19 in 2020 and 2021,” said Eileen Heisman, CEO of the National Philanthropic Trust in Jenkintown, Pennsylvania, referencing data in the organization’s just released 2023 DAF Report.
Encouragingly, despite economic challenges and an overall decline in charitable giving, contributions to DAFs grew 9% in pre-inflation dollars last year — the same as the dollar growth rate in grants — to an all-time high of $85.53 billion. However, this too was less than the 18% and 57% contribution gains recorded during the pandemic years of 2020 and 2021 and was insufficient to prevent total charitable assets in DAF accounts from falling 1.1% to $228.89 million following the $231.35 million high recorded during 2021.
Still, the increased contributions helped stave off what otherwise would have been an even greater decline in DAF charitable assets given an overall investment climate marked by declines in both the Dow Jones (8.8%) and S&P 500 (19.4%) stock market indices during 2022.
DAF grantmaking and contributions don’t necessarily reflect current economic conditions, in part because the money contributed often comes from retiree income and assets accumulated over many years or even decades. Additionally, “because DAF donors pre-fund their giving with irrevocable contributions, grantmaking from DAFs to charitable organizations is not as correlated to financial markets and individual household economic volatility. Donors already allocated assets in their DAFs to continue grantmaking and could support the causes that mean most to them,” said Heisman.
Other datapoints in the report include:
- The grant payout rate of DAFs fell to 22.5% during 2022. This followed record payout rate highs of 28.4% and 28.7% recorded during 2020 and 2021, further reflecting what appears to be a return to pre-pandemic normalcy.
- The average DAF account size decreased 3.8% from $122,146 (2021) to $117,466 (2022). Market volatility and growth in the variety of charitable giving tools and new workplace giving models contributed to the decline.
- The number of DAF accounts in the United States increased 2.9% from approximately $1.89 million (2021) to approximately $1.95 million (2022). Lower contribution minimums and growing interest in the flexibility offered by DAFs contributed to the increase.
Researchers compiled the findings by examining filings of 1,151 charitable sponsors of DAFs, including 725 community foundations, 353 charities with a single-issue focus, and 73 national charities operating independently or in affiliation with an investment firm. The findings are reflective of fiscal year 2022, meaning the reporting period for some organizations began as early as March 2021 and ended as late as December 2022 for others.
National Philanthropic Trust is the largest independent charitable sponsor of DAFs in the United States. The full 35-page report can be viewed on the organization’s website at www.nptrust.org.
