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Financial Planning > Charitable Giving

Fidelity Charitable Reports on Donors’ Use of DAFs

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Fidelity Charitable on Wednesday issued a report that analyzes how its donor-advised fund account holders use DAFs to support their favorite charities.

Fidelity also noted that it had become the second-largest grant maker in the U.S., behind the Bill & Melinda Gates Foundation.

According to a survey conducted in February and March, 62% of 1,042 Fidelity Charitable donors said they used a DAF to sustain giving in retirement.

Twenty-seven percent said they used the vehicle to capitalize on a wealth event, and 24% said it was to do good after receiving a year-end bonus.

Donors also liked several features of DAFs that enabled them to increase their charitable impact.

Seventy-three percent of respondents said that with a DAF they could give more money to charity by leveraging tax benefits, such as those associated with giving long-term appreciated assets.

Seventy-six percent noted that their DAF enabled them to grow charitable dollars with tax-free investment options.

And 68% said their DAF gave them time to research the charitable causes and organizations they wanted to support.

Various Giving Methods

According to Fidelity, nearly all DAF donors also use other giving methods. For example, 91% of respondents said they gave directly, 9% gave through community foundations and 6% through private foundations.

Donors reported different reasons for using various giving methods. Most of those who engaged in planned giving activities, such as large donations and recurring gifts, preferred to use a DAF.

Others who engaged in casual donations — perhaps responding to requests from family or friends, or supporting an individual in need — gave directly with cash or cash equivalents.

The survey found that on average, donors reported using a DAF for about two-thirds of their household’s charitable giving.

Advisor, Donor Conversations

According to Fidelity, high-net-worth donors — those with average DAF account balances of $250,000 or more — were more likely to engage family in giving.

Eighty-three percent of respondents who had an advisors had discussed charitable giving with them. However, 87% said these charitable planning conversations had primarily focused on giving methods, and 84% said tax benefits had been the chief topic of discussion.

The survey found that women were not only more likely to talk to advisors about charitable planning, but also more likely to engage in deeper conversations. “Most donors are financially and emotionally invested in philanthropy throughout their lifetime,” Fidelity Charitable’s head of fundraising Chris Carnal said in the statement.

“There is an opportunity for advisors to more deeply engage with their clients by expanding their conversations to include clients’ motivations for giving, their long-term giving goals, and how they would like to involve family in their philanthropy.”

Grant Making Accelerates

In a statement, Fidelity Charitable said its donor-recommended grant making had tripled in the past 10 years to more than $2.5 billion.

As a result, it said, citing a recent Foundation Center report, it has become the second-biggest grant maker in the U.S., lagging only the Bill & Melinda Gates Foundation. The Gates Foundation granted $3.3 billion in fiscal 2013, it said.

The number of charities supported by Fidelity DAF grants has doubled over the last decade to more than 97,000 last year, according to the statement. At the same time, the most popular charities have remained relatively consistent.

Doctors Without Borders, which has long been popular among donors, in 2014 became the charity supported by the most DAFs for the first time. Fidelity said this was likely due in part to grant recommendations for Ebola relief efforts.

Average activity within individual DAFs has risen significantly over the past decade, with donors recommending eight grants on average in 2014, up from five in 2005.

Fidelity said the percentage of pre-scheduled grant recommendations had also risen as more donors had taken advantage of the ability to plan their giving by recommending grants ahead of time.

In 2014, 23% of grants were from pre-scheduled recommendations, up from 8% in 2005. 


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