Donor-advised funds are major players in the charity world. These are foundation funds managed by an outside organization (often a community foundation), but the person who donates the money chooses what charities will receive the money. The National Philanthropic Trust reported on the results of these funds last year, and the news was good. Assets under management (i.e., investment returns), contributions, and grants all increased.
The investment performance is good news indeed. These funds tend to take less risk than endowments do because they are required to spend 5 percent of assets each year. (Endowments have no spending requirement, so they often invest in riskier and illiquid assets.) And yet, they are getting return, no easy feat in the current financial markets. More importantly, the money is being put to use.
