What Drove Americans to Increase Charitable Giving in 2022?

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

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.

“Advisors are uniquely positioned to help donors give more efficiently through tax-smart contributions and strategies to maximize their impact on those in need,” Fred Kaynor, managing director of business development, marketing and strategic partnerships at Schwab Charitable, said in a statement.

One important consideration in charitable planning is evaluating which assets to give. In fiscal year 2022, 61% of contributions to Schwab Charitable were in the form of noncash assets, including publicly traded securities, restricted stock and private business interests.

Donating appreciated noncash assets to charity allows account holders to potentially eliminate capital gains tax they would otherwise incur if they sold the assets first and donated the proceeds, which might increase the amount available for charity by up to 20%, according to the report.

Fidelity Charitable

During the first six months of this year, Fidelity Charitable donors recommended nearly one million grants to charity totaling a record $4.8 billion, an 11% increase in grant dollars over the same period last year. The increase in the first half followed a record-setting $10.3 billion granted in 2021.

“Despite rising inflation and market volatility, Fidelity Charitable donors have continued to lead with generosity and are providing record-high support to nonprofits,” Fidelity Charitable president Jacob Pruitt said in a statement. Pruitt succeeded Pamela Norley as president in October.

The humanitarian crisis in Ukraine was a major driver of grantmaking in the first half of 2022. Donors recommended more than $128 million in grants specifically earmarked to Ukraine aid efforts.

Fidelity Charitable noted that organizations providing assistance to refugees have seen significant spikes in support. For example, International Medical Corps saw a more than tenfold increase in the number of DAFs that recommended a grant, compared with the first half of 2021. Similarly, the number of accounts supporting World Central Kitchen grew more than fivefold.

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