New Research on Payout Rates of Donor Advised Funds
The Council of Michigan Foundation and Johnson Center for Philanthropy (GVSU) recently released “Analysis of Donor Advised Funds from a Community Foundation Perspective,” which explores the payout rates of donor advised funds held by Michigan community foundations. The study is among the most in-depth snapshots of DAF activity available to the field to date.
Brittany Kienker, Principal and Owner of Kienker Consulting, served on the project team for this research, as well as being one of the main contacts for the report. If you are trying to reach her to request more information about this research series, please use her CMF email address (bkienker@michiganfoundations.org).
The full report, technical appendix, and infographic are available at: https://www.michiganfoundations.org/resources/analysis-donor-advised-funds-community-foundation-perspective
CMF and the Johnson Center will also be hosting a free, national webinar, “A Data-Informed Dialogue on DAF Payout,” on July 22nd at 1pm. Registration is now open at: https://www.michiganfoundations.org/events/data-informed-dialogue-daf-payout
For reference, the full release from CMF is included below:
New CMF Research Explores Payout Rates of Donor Advised Funds at MI Community Foundations
What Does the Data Tell Us?
The COVID-19 pandemic and the national reckoning for racial justice have further illuminated the inequities rooted in our systems and policies. In Michigan and across the country philanthropy has led through these crises, deepening commitments, leveraging new partnerships and activating flexible resources to those working on the ground as we strive to create reimagined, equitable systems and thriving communities where every individual has the opportunity for success and well-being.
Among our field there have been calls to take this time to reexamine our practices and policies, recognizing the many challenges we see all around us, and the power and privilege philanthropy holds. Nationally, this has included renewed conversations among policymakers, the introduction of new legislation, and some calls from peers in the field, to impose mandates on the payout rates of private foundations and donor advised funds (DAFs).
As a leadership organization that supports our community of philanthropy in putting equity at the center, the Council of Michigan Foundations (CMF) is committed to providing access to quality data insights as a tool for the sector — grounded in the context of local and regional philanthropy — and committed to creating space for reflective conversation on what the data tells us.
Building on the learnings of previous studies CMF has commissioned over the past 20 years, CMF partnered with the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University and Plante Moran Financial Advisors to deepen and expand past research exploring foundation payout rates and investments.
An Evaluation of Private Foundation Model Portfolios, Investment Returns, & Payout Rates was released in December 2020 and captures what we believe is the most comprehensive snapshot of private foundation payout data available to date.
An Evaluation of Community Foundation Investment Returns & Payout Rates was released in early 2021 and focuses on payout rates of community foundations statewide and nationally, as well as in comparison to their private foundation peers.
In this final installment of our research series ─ Analysis of Donor Advised Funds from a Community Foundation Perspective ─ we again engaged the Johnson Center, this time to examine the payout rates of DAFs within the context of the philanthropic sector, specifically the payout rates of DAFs administered by community foundations.
Community foundations are working on the ground, at the local level, leveraging various tools to serve communities including giving circles, general funds, special focus funds and DAFs – a rapidly growing vehicle that allows individuals to manage their charitable giving through a sponsoring organization. DAFs are one of the tools available to community foundations that are managed in alignment with National Standards for U.S. Community Foundations. As we look to the critical role of community leadership and the acceleration of DAFs, we asked – What does the data tell us about DAF payout rates within our network of community foundations?
Data highlights:
Michigan DAFs that regularly make grants and occasionally receive contributions hold more than 80% of all DAF assets and make almost 90% of all grants.
43% of all DAFs paid out 5% or more of their balance in 2020 and one-third of all DAFs paid out 9% of their balance.
Two-thirds of all DAFs made outbound grants in both 2019 and 2020, and more than one in three DAFs (35%) increased both the dollars distributed as well as the payout rate from 2019 to 2020.
As we seek to advance deeper understanding and data-driven dialogue in our field, we encourage you to review the findings of this study and the full series and share any questions with our research teams.
We also hope you will save the date to join us on July 22 at 1 p.m. for a national webinar CMF will host in partnership with the Johnson Center, “A Data-Informed Dialogue on DAF Payout.” Together with foundation peers and fellow sector leaders from around the country, we’ll explore the study's key findings and consider how these knowledge insights can inform foundation policies, practices and grantmaking goals in our efforts to support equitable thriving communities.
Our hope is that these insights are helpful for the full philanthropy ecosystem — foundations, nonprofit partners, policymakers and all those who are working together to catalyze positive and systemic change with equity at the center.
If you have questions specific to the report please connect with CMF Knowledge Insights Expert in Residence Brittany Kienker, Ph.D. For related policy questions we encourage you to connect with Regina Bell, director, government relations and public policy.