Donor-Advised Funds’ Growth Surges: NPT Report for 2010

He said that NPT has seen growing interest in DAFs among high-net-worth and ultra wealthy clients, "those you would think would have not only the means but also the inclination to set up a private foundation." This is because DAFs allow donors to support charitable causes anonymously, whereas with a private foundation, everything is part of the public record. "For many individuals, philanthropy is an extremely personal endeavor. The last thing a lot of high-net-worth clients want people to do is to see their personal financial data. And they're looking to pursue their philanthropy quietly," Hastings said.

At the same time, for those who want to be identified with their charitable giving, the DAF provides that opportunity as well, he said. "If you want personal recognition, you can have it with a DAF; but what you can't have with a private foundation is anonymity."

Other factors tilt in DAFs' favor, Hastings said. The ongoing cost of administration to maintain a private foundation is far greater than with a DAF. And with the Pension Protection Act, individuals can be held personally responsible and liable for the actions of their foundations. "The penalties have increased, and the regulatory environment has gotten a lot stricter," he said. "So, unless it's going to be your full-time vocation like Bill and Melinda Gates, why have that attendant risk and responsibility when with a DAF, you get to focus on what's important to you, the philanthropy?"

NPTis an independent charity whose mission is to increase charitable giving in American society. The organization provides services that allow donors to establish donor-advised funds. Founded in 1996, NPT has raised more than $2 billion in charitable assets and made upward of 44,000 grants, valued at more than $1 billion, to U.S. and international charities.