Education and religious organizations were the biggest beneficiaries of American’s largesse last year, at least according to Fidelity’s newly released Giving Report,1 a study profiling contributors to Fidelity Charitable’s donor-advised fund program.
In 2014, Fidelity Charitable saw a continued rise in donor-recommended grants, with the total grant dollars to charities reaching a record $2.6 billion. That’s double the $1.3 billion granted in 2011, and more than triple the $800 million in grants made in 2005. The number of grants and the number of organizations supported also increased, while about half of them came in the form of non-cash assets.
Several factors appear to have contributed to growth in charitable giving. One is the increased use of donor-advised funds, which are among the fastest-growing vehicles for charitable giving in the United States, according to the National Philanthropic Trust.2 A donor-advised fund—called a Giving Account® at Fidelity Charitable—is a dedicated charitable account that enables donors to recommend grants in support of multiple public charities on their own timetable. Donors make an irrevocable contribution to establish a Giving Account and may take an immediate charitable tax deduction, and then they can recommend how these funds are used to benefit qualified public charities.
Although the average grant size is returning to pre-recession levels—$4,138 in 2014 compared with $4,531 in 2005—the average number of grants per Giving Account has risen steadily, from 5.2 in 2005 to 8.3 in 2014.
Last year, donor-recommended grants were distributed to nearly 98,000 charities, going to large groups such as The Salvation Army, Habitat for Humanity, and the American Cancer Society, and to local organizations such as churches and schools.
Aid organizations such as Doctors Without Borders and the American Red Cross were among the most popular charities supported by donors in 2014. Crises around the world—in particular, the Ebola outbreak in West Africa—led to a steep uptick in grants to these types of organizations.
Wealth planning, estate planning, and charitable giving
The data analysis also demonstrates that older donors tend to support more charities than younger donors. The average Fidelity Charitable donor is age 62, an age when donors on average support eight charitable organizations. By contrast, donors who are age 30 or younger support, on average, fewer than four nonprofits. “Older donors who are nearing or in retirement may have more time and resources to devote to their charitable giving, as they have a better sense of their financial picture,” explains Matt Nash, senior vice president of marketing and client engagement at Fidelity Charitable.
Also, more than half of contributions last year were non-cash assets, such as securities and non–publicly traded assets such as restricted stock or limited partnership interests, according to the report. “Donating cash often isn’t the most strategic way to give,” notes Nash. “Donating stocks can help donors take full advantage of their donations’ tax benefits, potentially resulting in more money going toward their favorite charities.”
“Giving Accounts also have helped many donors engage their families in philanthropic giving, “says Nash. More than a quarter of donors say they use donor-advised funds to help involve family in charity, and that number rises to more than 40% for higher-net-worth families with a balance of $250,000 or more in a Giving Account.
“Again and again,” he says, “our donors tell us that they want to instill the values of giving back in the next generation.”