More donors are giving more money to charity—using donor-advised funds to support a broader range of individual charities—than they did a year ago. That’s according to Fidelity Charitable’s newly released 2014 Giving Report, a study of more than 104,000 individuals in Fidelity’s donor-advised fund program.
The biggest beneficiaries are education and religious organizations. The newest trends are funding philanthropy through the donation of non–publicly traded assets and a growing focus among parents on teaching children about the rewards of philanthropy.
A donor-advised fund—called a Giving Account® at Fidelity Charitable—is a charitable account that enables donors to contribute in support of multiple public charities on their own timetable. Donors make an irrevocable, tax-deductible contribution to the account, where it can be invested and grow tax free until the donor is ready to recommend grants to a qualified public charity.
Generosity on the rise
In 2013, the report found, grants from nearly 64,000 donor-advised funds (Giving Accounts) benefited more than 87,000 charities, with an average of nearly eight grants per account. This is a significant increase from 2012, when grants from about 58,000 accounts benefited 77,000 charities, with an average of seven grants per account.
“We’re tapping into the generosity of Americans,” says Cynthia Strauss, director of research at Fidelity Charitable. “Two-thirds of our donors say that they give more than they otherwise would because they have a Giving Account. Combine the operational ease and tax efficiency of the account with the recovery we've experienced in the financial markets, and I think that will go a long way toward explaining why we see granting continuing to grow.”
Where the money goes
Donors represented in the Giving Report come from all 50 states and support a wide range of charitable sectors. By dollar amount, charities in the education, religion, and society benefit categories were the largest beneficiaries (see the chart below).
The report also shows that older donors tend to support a wider range of charitable sectors than younger ones do. “This is part of these donors’ philanthropic journey,” explains Strauss. “As they get older, they have more disposable income and the scope of their interests often expands.”
Younger donors tend to be more focused in their giving. “In the past, many people were giving out of obligation,” notes Strauss. “Now, younger donors seem to make their charitable giving more a part of their persona in a way that previous generations never really did.”
Echoes Stacy Palmer, editor of The Chronicle of Philanthropy: “Younger donors may be more focused on asking, ‘What difference is this nonprofit making?’”
How donors give
In 2013, the Giving Report found that nearly 45% of contributions to Fidelity Charitable were made in the form of publicly traded securities, such as stocks and mutual funds. But there was also a rise in the gifting of non–publicly traded assets, such as shares of a family business or the deed to a vacation home. In 2009, just 3% of contributions to Fidelity Charitable were non–publicly traded assets. By 2013, that number had jumped to 17%.
Whether a donor gives a vacation home or a portfolio of stocks, donating long-term appreciated assets can be a more tax-efficient way to support charitable causes than if the donor simply writes a check, says Karla Valas, managing director for complex assets at Fidelity Charitable. This is because capital gains taxes may be eliminated in such cases. “As a result, donors are empowered to give more than they could if they first sold the asset and then donated the after-tax cash,” Valas observes.
Giving: a family affair
Where does the motivation to give come from? Among donors under the age of 60 who were surveyed, nearly 60% indicated they learned to give from their parents, versus fewer than 40% among donors age 80 and older. That’s a good sign for the future of giving. According to a recent study from Indiana University’s Lilly Family School of Philanthropy,1 children whose parents talk to them about charitable giving are nearly 20% more likely to become donors themselves.
Nearly 80% of donors under the age of 50 surveyed in the Giving Report said they meet with family members at least twice a year to talk about their charitable plans. And these conversations may be not only about where their money should go, but why. “Children really want this information from their parents,” says Strauss. “They want to know about the family’s values, history, and experiences that form their charitable giving.”