Donor Advised Funds Continue to Increase in Popularity

The nation’s largest donor advised funds (DAFs) grew by a median of more than 20% from 2004 to 2005. Donor advised funds offer individuals and families a way to create a charitable fund and provide support to their favorite charities and causes. Through a Dynamic Donor Advised Fund, donors have additional flexibility – they can recommend grants to any charity at any time and in the amounts of their choosing.

While positive stock market performance in 2005 played a role in the overall increase, the primary reason for growth is that more and more organizations across the country are partnering with financial advisors. Denver Community Foundation assets increased more than 25% in 2005 after establishing partnerships with financial advisors. Between 2004 and 2005, the LCF experienced a 42% increase in number of Dynamic Donor Advised Funds, and a 153.5% increase in assets.

Since our inception in 1995, the LCF has been working with advisors like you to grow to over half a billion dollars in current and deferred gifts in just over a decade.

LCF Fees Are Lower than Average, but we continue to offer Better Service
Annual fees assessed to Donor Advised Funds nationwide average between 1.0% and 1.5%. As an example, the Schwab fund charges about 0.5% for administrative costs and about 0.7% for investment-management fees for a total of about 1.2%. LCF fees are lower than average at 1%. As a community foundation, the LCF is able to give donors more for their money. Because we are a non-profit organization, and have extensive grant-making experience we can offer more advice on giving and more personalized customer service than the commercial funds can.

Donor Advised Funds Grow as an Affordable Alternative to Family Foundations
People are realizing that donor advised funds are an incredibly affordable alternative to creating a family foundation. Many families are making a conscious effort to educate younger generations about giving. More families are creating donor advised funds and are including their children and even grandchildren in the grant-making decisions. A donor advised fund offers the flexibility of giving, like a family foundation, with better tax benefits for donations to the Fund and without the burdens of running a non-profit organization.

LCF Executive Director, Chris Andersen, discusses the popularity of donor advised funds in the Chronicle of Philanthropy (May 2007).

Charitable giving can result in significant tax, legal and financial consequences. Because the Foundation cannot give legal or tax advice, you are strongly encouraged to consult with your personal legal and tax advisors.

To ensure compliance with IRS requirements, be aware that any U.S. federal tax advice that may be contained on this webpage is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing and recommending to another party any transaction or matter addressed herein.

© 2007 Lutheran Community Foundation. All rights reserved. www.TheLCF.org