Key insights from the National Philanthropic Trust 2022 DAF Report

NPT 2022 DAF Report cover image

The National Philanthropic Trust (NPT), based in Pennsylvania with an additional office in the United Kingdom, is one of the most recognizable names in the fundraising ecosystem. Established in 1996, NPT manages more than $22 billion in charitable assets and makes grants on a global scale. In addition to their charitable work, their resources and publications are truly valuable to those of us in the field who want to know about current trends and statistics on philanthropic giving.

Their annual donor advised fund (DAF) Report was recently published, shining a light on nearly 1,000 DAF sponsors and the work that was completed in fiscal year 2021. One of the things that was most helpful in this report is the incredible level of detail and explanatory terms included. For anyone looking to learn more about the ins and outs of DAFs, this report is a great start. It describes the types of sponsors and gift types, as well as pertinent financial terms. It is a refreshingly clear-cut read for anyone, regardless of their familiarity with DAFS.

NPT looked at the following types of sponsor organizations:

  • National charities: Organizations that are either independent or administered by an investment firm, these sponsors have no religious or geographic focus area. Examples of national charities are the National Philanthropic Trust, Fidelity Charitable, and Renaissance Charitable Foundation.
  • Community Foundations: These sponsor organizations have a geographic or regional focus, such as the Community Foundation of New Jersey, Delaware Community Foundation, or Cleveland Foundation.
  • Single-Issue Charities: This group focuses their work on a specific faith group, issue area, cause, or institution. Examples noted by the report include the Jewish Federation of Rhode Island, San Diego Human Dignity Foundation, and Stanford University.

So what happened since their last report? A lot!

DAFs are more popular than ever. Here are some key facts and figures:

  • The number of individual funds increased to nearly 1.3 million;
  • 54% of sponsors noted an increase in funds.
  • Contributions rose an incredible 46.6 percent since 2020 (the report notes that such a large increase has only happened once before, ahead of expiring tax cuts in 2012).
  • The average size of a DAF regardless of sponsor type is $186,482

That average fund size is the smallest annual increase (9%) in NPT’s history of research. At its peak in 2017, the average fund size was $239,479 before dipping precipitously in 2018, staying in the $165,000 range until this past year. However, because of the increase in workplace giving DAFs and sponsors with low or no contribution minimums, the average account size may continue to grow in the years ahead.

NPT’s report also noted that thanks to a surging stock market, assets under management at those DAF sponsors increased significantly, up nearly 40 percent to $234 billion. Giving has risen for the past several years, and 2021 was no exception. The most important factor, giving, rose more than 28 percent compared to 2020, with an estimated total of $45.7 billion to charities! The payout rate, representing distribution from DAFs to those charities, also rose to 27.3 percent.

Assets Under Management (AUM) increased 40% to nearly $234 Billion

Giving rose nearly 28%, with $45.7 Billion going to charities

What are the factors behind this increase?

NPT notes several, such as the rise in the stock market, a significant drop in unemployment and businesses reopening after the first waves of the pandemic. For some, the 3.5% increase in personal income may have contributed to greater philanthropic giving.

For those of us in this industry, we’re fortunate that donors have a number of options when they choose to give. Grants and distributions from private charities totaled more than $96 billion in 2021, compared to $45.7 billion from DAFs. While English majors like myself attempt to digest those numbers, it is easier to see the impact of DAF giving when you look at a comparison of assets: in 2021, DAF assets totaled $234 billion compared to their counterparts in private foundations, which managed more than $1.3 trillion (with a T) in 2021.

The gap between managed assets and grants given is smaller when you look at DAFs. As mentioned by NPT, “it is important to note that grants from DAFs do not include any grant-related expenditures, administrative fees or operational overhead costs, while private foundations can include these in their grant and expenses total.” There is no federal minimum payout required for DAFs,* while private foundations must distribute five percent of assets through grants or expenditures. The donations by DAFs in 2021 were just that- donations- at the highest rate on record.

*Note- it remains to be seen what progress (if any) the ACE Act will have in the 2023 Congress.

While the number of DAF accounts are growing, how do the three types of accounts studied by NPT stack up against each other?

  • The first, national charities, increased their distributions by 41.6 percent in 2021, with a total value of $32.19 billion and increased their payout by 30.8 percent. Those steady increases are matched by donor contributions, which grew an impressive 53.2 percent since 2020! Total assets also grew to $150.82 billion, up 44.4 percent. However, the change in number of individual accounts, 31.1 percent, was a drop from the annual compound rate (measure of growth over a period of time) of 35%. The average size of national charity’s DAF account was $133,646, a 10.2 percent increase.
  • Next up are community foundations, which distributed more than $9.5 billion in 2021, a 16.5 percent increase. Contributions also increased by nearly double over 2020 to $14.56 billion! Total assets grew by 34 percent to $46.78 billion in 2020. The number of community foundation accounts grew slightly at 3.6 percent and total payout increased by .08 percent to 20.5 percent- the largest on record. The average DAF account size was $718,326- larger than single-issue or national charities!
  • Lastly, the report looked at single issue charities, whose contributions stayed relatively stable in 2021 with a modest increase of 3.7 percent ($5.9 billion). Their charitable assets grew by 23.6 percent to $20.56 billion with an increase in accounts by 11.5 percent. The average size of DAF accounts grew by 10 percent to $293,440. However, distributions dropped- the only sponsor type with a negative statistic- by 23.9 percent.

Overall, NPT’s annual report noted several positive trends- that there was an overall increase in assets and number of accounts at all three sponsor types. National charities grew the most, and grants from these sponsors equaled a staggering 70 percent of all DAF grants in 2021.

Although no one can predict the future, there was a lack of predictions for next year’s report. The two projections seem reliable- that giving will continue to grow, and because of the volatility in the stock market this year, there will be slower growth than in prior years. Here’s hoping that more trends and statistics come into focus over the next few months. We’ll be sure to cover them here!