ment . These funds allow donors to bundle donations that would otherwise be made over several years into one year — and push the donor over the standard deduction amount . The money is then available to be given out over a number of years .

The popularity of donor-advised funds is prompting some financial firms to establish or enhance their offerings . Regenerative Social Finance , a financial services organization based in San Francisco , invests in firms that are having a positive impact on the community . It recently launched the “ DAF Double Impact ” pilot program , which allows a small group of the firm ’ s donor-advised fund clients to invest portions of the funds in the firm ’ s RSF Social Investment Fund .

Fidelity Charitable , the largest grantmaker in the nation , has seen the impact of its donor-advised fund quadruple in the last decade , growing to more than 2.3 million donor-recommended grants totaling $ 11.8 billion in 2023 , according to Fidelity ’ s 2024 “ Giving Report .” “ It is $ 43 million getting out the door to charities every day ,” says Brandon O ’ Neill , charitable planning consultant for Fidelity Charitable . “ Giving through a [ donor-advised fund ] means there is no tax drag ,” because the money put in the funds is tax deductible and grows tax free until distributed . O ’ Neill calls this a “ triple win .”

“ The charity gets more funds . The client gets the tax benefits . And the financial advisor gets to build a deeper relationship with the clients by working with them on their philanthropic goals ,” he says .

He adds that advisors should “ think beyond cash ” when guiding their clients . “ One of the more impactful ways to assist your clients in giving more is to help them convert capital gains into charitable gains ,” O ’ Neill says . “ Capital gains taxes may be eliminated when clients contribute longterm appreciated assets directly to a charity instead of selling the assets themselves and donating the after-tax proceeds .

“ Advisors should encourage clients to take inventory and give the assets that make the most sense ,” he adds . “ Using a donor-advised fund also simplifies recordkeeping by allowing a person to track all charitable donations in one spot with one simple tax receipt from the sponsoring charity . … This streamlines the tax reporting , making philanthropy effortless .”

Jacob Pruitt , president of Fidelity Charitable , stated in the 2024 “ Giving Report ,” “ Even as concerns about the economy continued , Fidelity Charitable donors … provided a consistent stream of funding , benefiting nearly 199,000 unique nonprofits . Donors granted an average of over

“ One of the more impactful ways to assist your clients in giving more is to help them convert capital gains into charitable gains .” — Brandon O ’ Neill , Fidelity Charitable

$ 4,600 each time , with the average number of grants per year , per account , being 11.8 .”

Another large presence in the donor-advised fund space is DAFGiving360 , which until this year was known for most of its life as Schwab Charitable . The charity rebranded earlier this year , at a time when donations to the fund jumped dramatically .

For the fiscal year 2024 that ended June 30 , 2024 , DAFGiving360 donors authorized grants of more than $ 6.6 billion , a 31 % increase year-over-year , and supported nearly 141,000 charities through more than one million grants .

Like other charitable funds , Schwab found that donors are becoming more interested in giving to local organizations , according to its own 2024 giving report . Eighty-seven percent of donors made grants to organizations within their home states .

Sam Kang , president of DAFGiving360 , said in the report , “ The growth in granting we see year over year demonstrates that [ donor-advised funds ] can be an effective and efficient solution to help donors increase their commitment to philanthropy and make a lasting impact on the causes that are important to them .”

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DECEMBER 2024 | FINANCIAL ADVISOR MAGAZINE | 33