What You Need to Know
- This week, Schwab Charitable and Fidelity Charitable both reported big increases in grants to charity by their account holders.
- Schwab Charitable attributes increased donations to crises such as the COVID-19 pandemic and relief efforts in Afghanistan and Ukraine.
- Many account holders are donating noncash assets, which allows them to potentially eliminate capital gains tax they would otherwise incur.
Rising inflation and market volatility may be affecting Americans’ finances, but current economic conditions are also sparking an increase in charitable giving. This week, two of the country’s biggest donor-advised-fund sponsors, Schwab Charitable and Fidelity Charitable, reported big increases in grants to charity by their account holders.
Schwab Charitable donors increased grants to charity by 27% to some $4.7 billion in fiscal year 2022 (ended June 30). The grants supported 117,000 nonprofits through 993,000 grants, up by 24% from last fiscal year.
Donors granted an average of 13 times during the fiscal year, recommending more than half a million grants within their own states and supporting 11% more charities than during the previous year.
Schwab Charitable said one reason donors increased charitable giving in the last 12 months was to support those affected by recent crises at home and abroad. To date, they have recommended $7.7 million in grants to support organizations mobilizing relief in Afghanistan, and more than $50 million in grants to support aid efforts in Ukraine.
At the same time, donors also recommended more than 50,000 grants totaling more than $200 million to date to charities that are combating the effects of COVID-19.
Schwab Charitable noted that a DAF account enables donors to react quickly to events with charitable dollars. Seventy percent of donors said they gave more during fiscal year 2022 because of their Schwab Charitable account. Grants made on a mobile device increased by 30%.
According to the report, donors have increased the proportion of grants not designated for a specific purpose. These unrestricted grants have reached 72% of the total, affording even more nonprofits greater flexibility to put donations toward immediate needs.
Advisors play an increasingly critical role in their clients’ philanthropy; at Schwab Charitable, advisors manage two-thirds of account assets for donors.