Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
A check signing

Financial Planning > Charitable Giving

Charitable Giving Back at Near Pre-Pandemic Levels: Report

Your article was successfully shared with the contacts you provided.

After declining in 2020, charitable giving rebounded last year, according to BNY  Mellon Wealth Management’s 2022 Annual Charitable Gift Report, released Wednesday. The number of gifts increased by 10%, the total dollar amount of gifts by 27% and the average gift size by 15%.

The report found that charitable gift activity overall returned to pre-pandemic trends as many nonprofits came up with new approaches to build support for their missions and connect with donors.

“The financial markets held strong in 2021 and the planned giving activity demonstrated how sustainable the giving increase in 2020 was — and even with the present market uncertainty, people don’t stop giving, Crystal Thompkins, head of philanthropic solutions at BNY Mellon Wealth Management, said in a statement.

“With the majority of planned gifts still being funded with cash, it’s important to focus on conversations about appreciated assets and ownership. There are significant opportunities for nonprofits to optimize giving by working with donors to consider non-cash gifts and craft unique gift solutions.”

Progress in 2021

According to the report, gifts of more than $100,000 represented just 29% of the total contracts in 2021, but accounted for 85% of the total gift dollars. Gifts between $10,000 and $50,000 represented 54% of all contracts, the same as in 2020.

Eighty-three percent of gifts last year were in cash, while 17% were non-cash gifts, nearly identical to year over year comparisons.

The gift flow ratio — a ratio equal to or greater than one indicates new gift activity that outpaces gift terminations — was 1.09, indicating new gift activity outplaced gift terminations.

The report said this was driven by health care organizations that experienced an increase in gift flows from 0.68 in 2020 to 2.24 in 2021. Faith-based, or religious organizations, experienced the biggest drop, falling from 2.94 in 2020 to 0.93 in 2021.

Last year, new donors slightly outnumbered repeat donors, 51% to 49%. New donors’ average gift was $118,492, while repeat donors’ gift averaged $100,016.

New trust activity increased by 33% year over year in 2021, but total gift amounts decreased and the dollar amount of additions to trusts fell by 50%.

Thompkins noted that despite the slight uptick in the number of new trusts in 2021, trust activity has been on a relatively flat-to-downward trend since the 2008-09 recession. This is because of lower charitable deductions owing to the low applicable fed rate and donors looking to make a more immediate impact with their giving.

“That said, trusts are still a giving strategy that can provide solutions to both tax and estate planning needs and philanthropic goals, especially as part of a comprehensive giving strategy,” she said.

Donor-Advised Funds

Donor-advised funds continue to be an important part of the philanthropic landscape, and often are considered as the preferred option for charitable giving, according to the report.

It said grants distributed through the BNY Mellon Charitable Gift Fund experienced a record-level gift activity in 2021, with an increase in gift count of 93%, and gift amount of 55%.

Overall, donors are most likely to be using DAFs, according to the report. Among those familiar with various giving vehicles, 31% had experience with DAFs, 26% with charitable trusts, 24% with charitable bequests and 19% with family foundations.

Broken down by wealth levels, 30% donors with less than $25 million are likely to use DAFs, while nearly half of those with $25 million or more are more likely to favor charitable LLCs, charitable trusts and charitable gift annuities.

“During times of economic uncertainty when capacity for charitable giving may be limited, donors with DAFs are well positioned to provide critical funding to nonprofits when it’s needed the most,” Thompkins said.

“DAFs are being used in creative estate and tax planning strategies to promote legacy, family and next generation giving, which historically have been factors in forming private foundations.”

(Image: Shutterstock) 


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.