Close Close
ThinkAdvisor

Industry Spotlight > Clearing and Custodial Firms

How Fidelity, Schwab Charitable Donors Responded to Pandemic

X
Your article was successfully shared with the contacts you provided.

As the pandemic besieged the U.S. in 2020, account holders at Fidelity Charitable and Schwab Charitable, two major sponsors of donor-advised funds, significantly increased their giving over the previous year to support relief efforts by nonprofit organizations.

Fidelity Charitable

Fidelity Charitable reported that donors recommended 2 million grants totaling $9.1 billion to 170,000 charities; that was 31% more grants and a 24% increase in dollars over 2019. 

In addition, the more than 250,000 Fidelity Charitable account holders not only sustained nonprofits they had supported previously, but also made grant recommendations to organizations for the first time in 2020. Grants went to some 170,000 unique charities, up 10% from 2019.

The tremendous acceleration in giving last year showed the power of donor-advised funds to offer relief when it’s needed most and help sustain the nonprofit sector in the face of unprecedented adversity,” Fidelity Charitable’s president Pamela Norley said in a statement. “Notably, three-in-four grants were made to organizations donors had previously supported.” 

Grants to the human services sector accounted for about a quarter of giving in 2020. Grants to free food programs increased twelvefold. 

Three charities that provide food assistance — Feeding America, Meals on Wheels and World Central Kitchen — were among the 20 charities most supported by Fidelity Charitable donors for the first time last year. 

Nearly two-thirds of all recommended grants were designated “where it’s needed most.” Fidelity Charitable noted that this was a great benefit to charities that value flexibility as they struggled with last year’s demands. 

In 2020, donors also increased both the pace and the size of their recommended grants. The average account holders recommended 12.8 grants, compared with 10.8 in 2019. The average grant amounted to $4,614, about $250 more than the previous year. 

More than two-thirds of Fidelity Charitable contributions in 2020 were noncash assets, including publicly traded securities and non-publicly traded assets. This enabled donors to take advantage of strong market gains, minimize capital gains taxes and give more to charity, the report said. 

For instance, donors contributed $28 million in cryptocurrency into their charitable accounts, way up from $13 million in 2019. 

Impact investing grew in both investments and philanthropy last year, as donors continued to align their investment recommendations with their values. 

More on this topic

Donor-recommended allocations of charitable assets to investment funds with sustainable ratings now total $1.8 billion, nearly doubling in two years. In addition, donors recommended more than five times as many grant dollars to impact investing nonprofits — nearly $100 million — as they did five years earlier. 

Schwab Charitable

Schwab Charitable reported that its account holders supported nearly 100,000 charities in 2020 through 830,000 grants totaling $3.7 billion. Compared with 2019, dollars granted to charities increased 35% and the number of grants to charities rose 39%.

“[Donors’] commitment to supporting those most impacted by the COVID-19 pandemic and other crises we faced last year has truly been inspiring,” Kim Laughton, president of Schwab Charitable, said in a statement.

Schwab Charitable donors recommended grants to 13% more charities than in 2019, and 74% of donors supported at least one new charity in addition to organizations they had supported in the past. 

Donors also increased their support of the deep and varied needs in their local communities brought on by the pandemic. Sixty percent of grants went to organizations within a donor’s own state. In addition, three in five grants were not designated for a specific purpose, which afforded nonprofits greater flexibility to deliver critical services.

The top charities donors supported in 2020 were Feeding America, Doctors Without Borders, Salvation Army, Planned Parenthood and Campus Crusade for Christ.

Schwab Charitable said giving may continue to grow in 2021, representing an opportunity for donors to have more impact with their generosity through a thoughtful, strategic approach to philanthropy. 

In a survey the DAF sponsor conducted in January, 56% of respondents said they planned to increase the amount of money they grant to charity over the next 12 months. Another 44% planned to support a new charity this year, with the most interest in organizations that deliver vital human services, such as food, housing and disaster recovery.

In 2020, approximately 60% of contributions to Schwab Charitable were in the form of non-cash assets, including publicly traded securities, restricted stock, and private business interests.

In November, Schwab Charitable added a new Socially Responsible Fixed Income Pool to the diverse suite of values-based investment pool options currently available to donors.

The report noted that financial advisors can help clients navigate the giving landscape and use tax-smart giving strategies to maximize their charitable impact. Three-quarters of Schwab Charitable DAF account assets are associated with a professional investment advisor.