Fidelity, Vanguard, Schwab Passed Along $5.7 Billion

February 3, 2017       Mark Hrywna      

As giving to donor-advised funds (DAF) continues to grow so does grant-making by the charitable giving vehicles.

This week, Fidelity Charitable reported a record $3.5 billion in distributions on behalf of donors last year, a 15-percent increase compared to 2015. Schwab Charitable facilitated more than $1.5 billion in grants to charities in 2016, a 41-percent increase from the previous year. Vanguard Charitable reported distributing $686 million after a record $717 million in the previous year but the number of grants recommended grew 13 percent.

The Boston, Mass.-based donor-advised fund (DAF) arm of Fidelity Investments also reached its commemorative 25th anniversary goal – a cumulative $25 billion in giving by the end of 2016 – on Dec. 16. In the 20 years since Vanguard Charitable was founded, more than $6 billion has been distributed by donors.

Some 840,000 grants were recommended to more than 110,000 charities in 2016 through Fidelity Charitable. A detailed breakdown of donors’ habits will be included in its annual Giving Report, to be released in June. The “2016 Fidelity Charitable Giving Report” indicated roughly $3.1 billion was distributed during 2015, up 20 percent from $2.6 billion in 2014.

Schwab Charitable donors supported 61,000 charities and recommended approximately 273,000 grants, up 17 percent from 233,000 grants in 2015. Individuals mobilized support around a range of domestic and international causes in 2016, including relief efforts for Hurricane Matthew, flooding in Louisiana, and the global refugee crisis.

Almost half of the total value of grants by Schwab donors were distributed during the fourth quarter, with 128,000 grants totaling nearly $672 million. The amount granted was an increase of 75 percent over the same time period in 2015 and represented 45 percent of the total value of grants for the year.

While total dollars distributed decreased about 4 percent from a record in 2015, donors to Vanguard Charitable recommended 78,000 grants in 2016 to almost 30,000 charities, up 13 percent and 9 percent, respectively. Almost 10 percent of all Vanguard grants, about 7,400, went to first-time grantee organizations. Unrestricted giving was up by 14 percent. Donors recommended 16 percent of total dollars during June and July.

Some donors who made substantial grants in 2015 did not repeat them in 2016, a not uncommon trend that may skew year-over-year comparisons, according to a spokeswoman for Vanguard Charitable.

The Valley Forge, Pa.-based DAF reported an increase in new accounts of 31 percent last year. The average account granted 7.5 times in 2016 totaling more than $56,000. Almost 60 percent of contributions came from noncash assets, such as highly appreciated assets that otherwise would be subject to capital gains if sold.

The top 10 grantee organizations shifted in 2016, reflecting a focus on civil rights, refugees and the environment. The top three subsectors receiving grants were human services, religion and education. Of chose, donors recommended more grants to human services and religious organizations but fewer dollars while education organizations received fewer grants but more dollars.

Fidelity Charitable began accepting Bitcoin in November 2015 and accepted $7 million in Bitcoin contributions last year. During 2016, the DAF also launched a charitable practice management program and updated IT infrastructure.

Strong financial markets in 2016 were likely one reason for the increase in grant recommendations, according to Fidelity, and a “renewed sense of urgency” among donors to support causes they care about following the presidential election.

“Many investors turned to charitable giving to offset higher capital gains and income taxes associated with earnings from a strong economy and high-performing stock market,” Schwab Charitable President Kim Laughton said. “Uncertainty over the new administration’s tax policy also encouraged donors to maximize the significant benefits of charitable giving under the existing tax code,” she said. About 68 percent of contributions into Schwab Charitable donor-advised fund accounts were non-cash assets last year

Fidelity Charitable and spent last year making improvements in programs, IT infrastructure, and interface for donors and financial advisors. It also launched a charitable planning practice management program, counseling advisors on “how to incorporate charitable giving into a holistic wealth offering.”

In July, Fidelity Charitable reported a record distribution of $1.6 billion to nonprofits during the first half of the year, at the time a 14-percent increase over the same period in 2015. Donor-recommended grants totaled $3.3 billion for the fiscal year of June 2015 through July 2016. The volume of donations increased by 8 percent in the first half of 2016, to more than 330,000.

  • donor-advised funds
  • Fidelity Charitable
  • Schwab Charitable
  • Vanguard Charitable