Donations to two of the largest donor-advised funds (DAFs) have jumped in response to the coronavirus pandemic, calls for racial and social justice and economic uncertainty. Both the Fidelity Charitable and Schwab Charitable DAFs reported record distributions.
Fidelity Charitable DAF donors recommended $4.3 billion in distributions during the first six months of 2021, a 27% increase over the first half of 2020’s level, according to the organization. More than 123,000 charities benefited from the donors’ largesse.
The pace of Fidelity Charitable distributions picked up during the second half of 2020, according to data from the firm, as the impact of the coronavirus pandemic, combined with increasing awareness of racial and social justice issues, brought needs for charitable funding to the forefront. Fidelity Charitable distributed $9.1 billion during 2020, up 24% from $7.2 billion the previous year.
“These incredible results suggest that our donors could surpass the record granting in 2020, showing us that people continue to prioritize generosity as we define the ‘new normal’,” Fidelity Charitable COO Kristen Robinson said in a statement. “It’s very heartening to see much-needed support going to nonprofits as they continue to face challenges.”
Donors to Fidelity Charitable DAFs would have to contribute at least $4.9 billion during the next six months to surpass 2020’s level. Second-half 2020 will, of course, include the high-solicitation end-year donation period.
Schwab Charitable, announced that its donors had released more than $3.7 billion during its full 2021 fiscal year, which ended June 30. The amount donated was a 13% increase in dollars granted compared to FY 2020, and the 113,000 charities that received grants during FY 2021 were 12% more than the previous year.
“Schwab Charitable donors demonstrated extraordinary generosity during a particularly difficult 12 months,” Schwab Charitable President Sam Kang said in a statement. “I am proud of our efforts to help increase their giving power at a time when charitable giving has never been more important. We are committed to providing donors and their financial advisors with the most efficient, tax smart charitable giving solution while helping them explore new and impactful ways to achieve their philanthropic goals.”
Donors increased the value of their grants in other ways. Unrestricted grants by Schwab contributors, which allow recipients greatest flexibility in how funds are used, increased by 48% from the previous year.
The distribution increases come at a time when DAFs are coming under review from a variety of interests. Congress is considering the Accelerating Charitable Efforts Act, which would modify the tax benefits of contributing to a DAF by imposing new DAF structures and timelines for distributions. Similarly, the Initiative to Accelerate Charitable Giving, an independent consortium of philanthropists, foundation leaders, and others in the philanthropic community, is advocating for a variety of changes that would liberalize distributions.
Donor-advised funds are accounts run by public charities that support donors’ charitable giving by offering tax breaks, strengthening the financial impact of contributions through investments and offering donation counseling.