What You Need to Know
- Some divorced donors of more limited means must reduce their giving or cut back on their philanthropic commitments.
- Some divorced women who have the interest and ability to give open DAF accounts or contribute more to the ones they have.
- Some DAF donors who have been divorced feel free to develop their own charitable mission.
In recent years, there have been a number of high-profile divorces that have affected the charitable world. MacKenzie Scott has donated over $8 billion in the two years since her divorce from Jeff Bezos, and since her estimated net worth is still around $60 billion, she likely will remain an active donor for years to come. Though Melinda French Gates and Bill Gates will still work together on their foundation, it is expected that she will also give separately to various causes and charities.
Divorce affects the charitable giving activities of most donors who go through the process, and not just those who are billionaires. Some divorced donors with more limited resources have been forced to reduce their giving or cut back on their commitments to and involvement with organizations they’ve previously supported.
On the other hand, the American Endowment Foundation has seen a growing number of donor-advised fund accounts created by its donors who have recently been divorced.
Numerous studies from the Lilly School of Philanthropy at Indiana University and others have shown that women are generally more philanthropic than men. Women give to more organizations, participate in giving circles and group giving, volunteer more, and engage their children in philanthropic activities more than men.
As a result, when some women get divorced, gain complete control of their finances and have the interest and ability to give, they open DAF accounts or contribute more to the ones they have. Paul Stagias of Francis Financial in New York, which works with many clients who are going through divorce, explained that some of their clients were not aware of giving options or that donations made with cash or credit card were the least efficient way of making donations.
“They are always very pleased to learn that they can donate appreciated stock or other assets, and that creating DAF accounts can enable them to give easily and with greater impact,” he said.
With the increase in gray divorce, Heather Locus, the National Divorce Practice Group leader at BDF Private Wealth Management, recommends that “high-net-worth charitably inclined clients be thoughtful on their division of retirement assets. Sometimes new clients who are IRA owners over age 70.5 are not aware they can distribute up to $100,000 of their IRA accounts tax free to qualified charities (though not to private foundations or DAFs).
”These qualified charitable distributions (QCDs) can satisfy the required minimum distributions that are otherwise highly taxed at age 72 and beyond and are not subject to the percentage of adjusted gross income limitations by which cash and stock donations are restricted.”