Last week I participated in a terrific debate about donor-advised funds with my good friend Stuart Comstock-Gay, the president of the Vermont Community Foundation. (Thank you, Planned Giving Council of New Hampshire and Vermont, for inviting us!)
Stu and I found a lot of common ground, as well as several areas where we cordially agreed to disagree. Stu made the case for donor-advised funds, saying that their flexibility and low entry point encourage charitable giving and democratize philanthropy — private foundations for the average person. He also emphasized their efficiency. I brought out my concerns (familiar to readers of this column) that donor-advised funds were attracting money that otherwise would be going to actual charities. I also pointed out that money goes into donor-advised funds more readily than it comes out, and I described the unethical financial incentives that are driving the growth at commercial gift funds such as Fidelity.
In preparing for the debate I came up with some numbers that I think illustrate the challenges posed by donor-advised funds. (Because we were meeting right across the river from Dartmouth College, by far the largest fundraising operation in Northern New England, I make references to Dartmouth in a few places.)
2 Ranking in 2012 (the most recent year studied) of Fidelity Charitable in the Philanthropy 400, the Chronicle of Philanthropy’s listing of American nonprofits that have raised the most money.
89% Increase in donations to Fidelity Charitable from 2011 to 2012.
13 and 18 Ranking in the 2012 Philanthropy 400 of Vanguard Charitable Endowment and Schwab Charitable, the second- and third-largest commercial donor-advised funds.
21 and 24 Ranking in the 2012 Philanthropy 400, respectively, of Harvard and Yale Universities.
105% Increase in donations to donor-advised funds between 2009 and 2012.
1:17 Ratio between what Dartmouth College raised in 2012 ($194 million) and what Fidelity Charitable raised ($3.2 billion).
1:3 Approximate ratio of the Dartmouth College endowment after 245 years ($3.7 billion) to the assets of Fidelity Charitable after 23 years ($10 billion).
201,631 Number of donor-advised funds in the U.S. at the end of 2012.
$13.7 billion Total dollars donated to donor-advised funds in 2012.
$9.4 billion Total dollars donated to all environmental, conservation, and animal rights organizations combined in 2012, or $4.2 billion less than what was given to donor-advised funds.
$45.3 billion Total dollars held in donor-advised funds at the end of 2012.
1007 Number of entities sponsoring donor-advised funds, according to the National Philanthropic Trust, including 47 financial institutions.
$75 million Estimated fees earned by Fidelity Investments on investments in their mutual funds from Fidelity Charitable (based on .75% average fee on $10 billion total assets).
70% Percentage of donations that Fidelity Charitable says involve the donors’ financial advisors (that is, where the donors’ brokers are being paid a commission for advising on the investments of the funds held there).
100% Percentage of donations that involve providing commissions or fees to donors’ financial advisors at the American Endowment Foundation, a commercial gift fund based in Hudson, Ohio.
102% Increase in donations to the American Endowment Foundation between 2011 and 2012 ($62.5 million to $126.7 million).
16% Average 2012 pay-out from all donor-advised funds.
16% What the annual grants paid by donor-advised funds would be if 20% of the donors, by fund value, paid out 80% of their funds in grants, and the other 80% of donors paid out absolutely nothing.
0% Amount that donor-advisors are required by federal law to grant out to charity in a particular year… or ever.
1 Minimum number of grants that Schwab Charitable requires its donor-advisors to recommend in a five-year period.
$50 Minimum grant size at Schwab Charitable.
Copyright Alan Cantor 2014. All rights reserved.