Giving Through Donor-Advised Funds Holds Steady, Despite Fewer Contributions

Hoping to blunt the impact of the recession, individuals who use donor-advised funds to manage their charitable donations are giving to their favorite charities at levels similar to what they gave before the recession, even if many of them haven't been able to make new contributions to their funds, the Associated Press reports.

Since the start of the recession, donors who rely on the rising value of their portfolios to fund their philanthropy have been putting less money into several of the largest donor-advised funds. Contributions to the Vanguard Charitable Endowment Program during the fiscal year that ended June 30, for example, were down 20 percent from 2008. "From October 2008 to February 2009, people were basically paralyzed," said the fund's chief relationship officer, James Barnes. "They were paralyzed by the down economy, the market, Madoff, and other issues." Grants awarded through the fund saw a relatively moderate decline of 11 percent.

According to research from the Center on Philanthropy at Indiana University, even in good times money distributed to charities from donor-advised funds, which are conservatively estimated to have assets totaling $21 billion, represents only 3.5 percent of overall charitable giving. What's more, because donors can claim a tax deduction when they put money into a donor-advised fund rather than when they make a grant, charities often have a love-hate relationship with the funds.

But with charities preparing for year-end fundraising drives amid one of the worst recessions in decades, contributions from any and every source are sorely needed. Still, with many donors feeling wealthier as a result of the robust summer rally in stocks, some experts believe charities have reason to be optimistic as the end of the year approaches, while others are taking more of a wait-and-see approach. As Fidelity Charitable Gift Fund president Sarah C. Libbey put it: "Donors, like other investors, are sitting on the sidelines waiting to see how much they ultimately will contribute."

Stephen Singer. "In Recession, the Philanthropist Next Door Balks." Associated Press 10/24/2009.