Schwab Charitable President Kim Wright-Violich announced she would leave the donor-advised fund (DAF) on June 30, after 11 years at the helm. Wright-Violich has been there since the DAF’s inception, building it into a powerhouse with $5 billion in contributions and $2.4 billion granted out to nonprofits since it was founded in 1999. Schwab Charitable is the second-largest national DAF.
“It’s been a fabulous, wonderful experience. Schwab Charitable is a great place. We grew contributions by 120% last year. Our advisor program, where registered investment advisors manage [their client’s donated] assets is four or five times larger than any other in the industry,” Wright-Violich (left) told AdvisorOne in Chicago on Friday.
“It’s smart when you go on to something new to leave on a high note. Schwab Charitable is a wonderful place—the growth and service will continue,” she added.
In the announcement on Thursday, she said, “Among our many innovations, the most notable was creating a role for financial advisors in donor advised funds. We believe that engaging wealth advisors in philanthropy not only facilitates tax-smart investing and financial planning, but also increases charitable giving.”
Wright-Violich also explained in the announcement that she wanted to try her "hand at another entrepreneurial challenge, with similar societal benefits. Organizationally, the timing is right because Schwab Charitable is healthy. At the end of 2010, Schwab Charitable went through a restructuring to achieve tighter integration with Schwab. The increased integration reduces our organization’s dependence on any single leader. It is a perfect moment for undisruptive change.”
Trends in Philanthropy
At the 2011 Conference on Philanthropy, hosted by Advisors in Philanthropy, in Chicago, Wright-Violich gave a keynote speech on Thursday about Trends in Philanthropy. She said the Schwab Charitable DAF takes in “about $800 million” in donations, and grants “about $ 500 million a year.” The DAF accounts at Schwab Charitable range in size, she said, from
“$5,000 to $370 million.” Contributions to the DAF provide an immediate tax deduction to the donor even if the money is not granted out to nonprofit organizations immediately.
Wright-Violich notes that there is a “proliferation of choices,” in charitable giving today, adding that the number of nonprofits in the U.S has grown to “1.5 million, a 30% increase in last 10 years.” She says also that “peer-to-peer communication” has increased, because “people think peers are the least conflicted source of information,”
Once advisors have answered clients’ essential questions, “Will their money outlast them?” and “Will it provide a safety net for their children?” it is time to ask, “How can the money provide purpose and meaning in their Iives?” Philanthropy reflects “who they are,” says Wright-Violich.
Some advisors may be surprised to learn that the “biggest source of donations” to nonprofits is “living individuals,” which accounts for 75% of giving. Foundations account for 13%, according to Wright-Violich.
Overall, “U.S. giving is 2% of GDP” and is fairly “steady” even thorough the downturn, according to Wright-Violich.
Advisors who initiate conversations with clients about philanthropy may be surprised how well they are received. Wright-Violich said that “clients are initiating 84% to 94% of charitable conversations, with advisors initiating 5% to 15%.” This gap provides a big opportunity for advisors to add value.
Advisors can start to add value fairly simply by helping clients with philanthropy in these ways:
- “Help sort through the clutter.”
- “Develop a bench of experts.”
- “Stay on top of trends” in philanthropy.
- “Be a non-conflicted source; start with a picture of their philanthropic wishes”