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Financial Planning > Charitable Giving

Schwab Donor-Advised Fund Grants Rose 26% in 2019

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Schwab Charitable’s donor-advised fund account holders recommended some $2.7 billion in grants to charity in 2019, a 26% year-over-year increase in dollars granted and nearly double the amount granted in 2016.

Donors made more than 600,000 grants to 89,400 charities last year, a 24% increase over 2018, Schwab Charitable reported.

“I have been truly inspired by the generosity of our donors throughout Schwab Charitable’s 20-year history,” Schwab Charitable’s president said Kim Laughton said in a statement. “Strong market performance in 2019 encouraged many donors to reach new heights of generosity by making tax-smart contributions of appreciated assets.”

According to the report, many donors were able to capitalize on robust market growth in 2019 to fund their charitable goals by donating appreciated investments and assets.

Last year, 69% of contributions to Schwab Charitable were in the form of noncash assets, such as publicly traded securities, restricted stock and privately held business interests.

The report said that after two years under the new tax law, many donors better understand how they can effectively incorporate charitable giving into their tax planning to address changes in their tax situation while achieving maximum impact with their philanthropy.

“Bunching” contributions continues to be a popular option for many donors. By concentrating charitable contributions in some years, donors who might otherwise take the standard deduction can take advantage of the itemized charitable deduction while still being able to benefit from the increased standard deduction in other years.

And by contributing appreciated, noncash assets held for a year or more to a DAF, donors can increase funds for charity in two ways.

First, they avoid the capital gains tax they would incur if they sold the assets themselves and donated the proceeds. This may increase the amount available for charity by up to 20%, according to the report.

Two, donors receive a charitable deduction for the current calendar year, and may choose to pass on that savings in the form of more giving.

The report noted that donors increasingly look to their financial advisors each year for support and expertise with their charitable giving. Last year, the number of advisors that used Schwab Charitable on behalf of their clients increased by 12%, with more than two-thirds of Schwab Charitable assets associated with advised accounts.

In the past five years, charitable planning jumped from the fifth to the third most popular service offering at advisory firms, the report said, citing Schwab Charitable RIA benchmarking studies conducted in 2015 and 2019. Over the same period, the dollar value of grants facilitated by Schwab Charitable tripled.

“As we enter 2020 and think about how donors can continue to increase their impact, we are grateful that financial advisors continue to encourage clients to plan and fund charitable goals as part of their overall financial planning,” Laughton said.

Support for Diverse Causes

Over the past two decades, Schwab Charitable donors have cumulatively granted upward of $14 billion to more than 163,000 charities, according to the report.

Last year, donors gave to causes and charities ranging from global relief organizations to their favorite local nonprofits. The most widely supported sectors were religion, human services and education.

Feeding America, Planned Parenthood, Doctors Without Borders, Campus Crusade for Christ and Salvation Army topped the list of grant recipients.

Seventy-one percent of all donor accounts recommended grants within their own state in 2019, and nearly $2 million was dedicated to disaster relief efforts in the U.S. and across the world, including for the California wildfires and Hurricane Dorian.

Donors recommended grants on average between six and 12 times in 2019, according to the report. In December, generally the busiest month for charitable giving, Schwab Charitable processed an average of 4,500 grants per day.

Last year also saw a 54% increase in the number of grants made from a mobile device compared with 2018.

— Check out Your Client Opened a Donor-Advised Fund Account. Now What? on ThinkAdvisor.


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