ChAritAble giving
the money available from a business conversion or some other economic windfall . The money grows tax-free inside the fund , and it ’ s then available to give as grants to a particular charity , a disasterrelief cause or a charitable project .
“ Donors see [ them ] as a reliable , resilient way to set money aside for their philanthropic interests ,” Kaynor says . Donor-advised funds have also seen an increase in “ unrestricted ” gifts — when the donor gives the money to a charity without designating exactly what it ’ s for , Kaynor says , adding that Schwab Charitable has seen a 72 % increase in these grants over the last year .
Most advisors asking about noncash assets want to know how they are valued , says Colby Bircher , vice president and charitable planning consultant at Fidelity Charitable , a donor-advised fund
that has taken in $ 10 billion in noncash assets since 1991 —$ 2 billion of that realized in the last year , which shows this type of giving is increasing in frequency . Overall , Fidelity donors distributed nearly $ 10.3 billion in grants during 2021 , a 41 % rise from the levels before the Covid-19 pandemic and a 13 % increase from 2020 . A full 64 % of those grants were unrestricted .
“ As donor-advised funds grow , they are increasingly vital as a sustaining force of funding for charitable organizations , particularly in periods of prolonged economic hardship , as they enable donors to contribute the right asset at the right time to make a difference for the future ,” says Jacob Pruitt , Fidelity Charitable ’ s president , in his fund ’ s annual report . “ Many of our contributions are noncash assets , which are then liquidated into funds for granting — a tax-efficient strategy many donors are embracing in a rapidly changing economy .”
Inflation is having a somewhat negative effect on all forms of economic activity , including philanthropy , but giving overall is holding up , say donor-advised fund managers . “ In 2021 , the U . S . had a strong year economically and also experienced inflationary pressures not seen in several decades ,” said Una Osili , associate dean for research and international programs at the Lilly Family School of Philanthropy at Indiana University , writing in the school ’ s annual report .
“ While the stock market performed well in 2021 , there were some economic factors that may have affected nonprofits ’ operations , such as labor shortages , supply chain interruptions and ongoing high demand for services ,” Osili continued . “ The growth that we see for the
Overall , Fidelity donors distributed nearly $ 10.3 billion in grants during 2021 , a 41 % rise from the levels before the Covid-19 pandemic and a 13 % increase from 2020 . A full 64 % of those grants were unrestricted .
majority of the [ charitable ] subsectors in 2021 is a reminder of the resilience and innovation that help to drive the philanthropic sector .”
Amir Pasic , the Eugene R . Tempel Dean of the Lilly Family School of Philanthropy , added in the report , “ The environment for giving is evolving in multiple ways . Robust economic growth translated to strong performance by institutional forms of philanthropy such as foundations and corporations . Yet these economic indicators may differ from what most people experience in daily life . The broader effects of the pandemic may have shifted individual jobs , incomes , lifestyles and family and financial priorities , potentially affecting their giving habits .
“ The novel circumstances of the current giving landscape ,” Pasic continued , “ underscore the need for this report and other high-quality research , which help us understand how widespread these changes are and how they are affecting philanthropy .”
“ Philanthropy is what our country was built on , which is why it has been sustainable even in economic hard times ,” says Jodi Rosen , director of business and product development , at Vanguard Charitable . “ The current inflation only affects the world for a short time period . Philanthropists are looking at the long term .”
For the first half of this year , donors increased giving by 14 % at Vanguard Charitable to just under $ 1 billion , Rosen says . The average grant is up 6 % to $ 11,000 . Possibly because of the pandemic and the invasion of Ukraine , which is causing such suffering , grants to human services causes are up the most , she says .
At the beginning of the Covid pandemic , Vanguard Charitable launched the Nonprofit Aid Visualizer , or NAVi , to help donors locate particular causes that aligned with their interests . This tool has now been expanded for the post-Covid era and is available to the general public on the Vanguard Charitable website . The tool was developed to help donors focus giving on “ the communities that are being overlooked with charitable donations ,” says Magda Guillen Swanson , research project strategist at Vanguard Charitable .
A donor-advised fund such as Vanguard Charitable is in a good position to help people convert a noncash asset , which they may not otherwise know how to turn into cash , when there ’ s a need for emergency services in the community , Rosen says .
Schwab Charitable says that it and other donor-advised funds reported an overall increase in giving for all types of assets , including cash , despite growing volatility and high levels of inflation . By the end of fiscal 2022 on June 30 , Schwab Charitable donors had made an average of 13 grants each , supporting a total of 117,000 organizations , which was 11 % more than they did during the
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30 | financial advisor magazine | september 2022 www . fa-mag . com