Historic Year for Giving, Says Schwab Charitable’s Kim Laughton

Schwab Charitable reports robust activity by its donor-advised-fund clients

This may be the biggest year in history for American philanthropy, Kim Laughton, president of Schwab Charitable, said in a statement this week on the release the donor-advised-fund sponsor’s 2017 giving report.

Laughton pointed to three factors she said advisors should discuss with their clients about why now is an ideal time to embrace charitable giving.

One is the improving economy and strong market performance. She noted that the S&P 500 has risen by 80% in the last five years, and because of healthy investment gains, many investors now face higher tax bills.

Donors who contribute appreciated assets they have held for more than one year to charity can help offset these taxes and increase charitable giving by as much as 20%, she said.

Another factor is possible tax reform legislation. Laughton said the value of charitable deductions increased in 2013 when income tax and capital gains tax rates went up for most high-income earners.

Although the itemized charitable deduction will likely be protected in some way in legislation resulting from the current tax-reform push, she said, any reduction in income or capital gains tax rates could lower the value of charitable deductions.

Finally, there is the huge level of disaster relief support needed across the U.S. In the past few months, hundreds of thousands of people have been hit by hurricanes, floods and fires, and are in desperate need of food, emergency shelter, clean water, electricity and access to critical medical care.

Laughton said that as of the beginning of October, Schwab Charitable donors had recommended upward of $12 million in grants for hurricane and earthquake relief, and this number continued to grow.

2017 Giving Report

Here are some highlights from Schwab Charitable’s latest giving report.

In fiscal year 2017, ended June 30, total contributions amounted to $3.1 billion. Sixty-eight percent of donors contributed appreciated noncash assets to their Schwab Charitable accounts in order to offset higher tax bills.

The report said this represented potential greater giving and capital gains tax savings of more than $310 million.

Total grants increased by 29% over the previous fiscal year to $1.6 billion, the third year in a row grants exceeded $1 billion.

Account holders’ charitable donations went to some 65,000 nonprofit organizations, up from 56,000 in fiscal 2016. The top five beneficiary groups were Feeding America, Planned Parenthood, Doctors Without Borders, The Salvation Army and ACLU.

The report said the number of recurring grants increased 10-fold over five years, from 4,184 in fiscal 2013 to 43,509 in fiscal 2017.

The proportion of grants donors have recommended through Schwab Charitable’s online and mobile tools has risen from 90% four years ago to 96% today. Grants using the Schwab mobile app increased by 88% in the past year.

According to the study, the number of Schwab Charitable donors who associate their accounts with an investment advisor has inched upward, from 33% in fiscal 2013 to 42% in fiscal 2017.

The report said this suggested that advisors were still in the early stages of incorporating charitable planning in their offerings to clients — a way to deepen relationship and expand business, it said.

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