Fidelity DAF Grants Averaging $4,138

Fidelity Charitable was the second largest grant-maker in the United States last year behind only the Bill & Melinda Gates Foundation. The Boston, Mass.-based donor-advised fund (DAF) distributed almost $2.6 billion from more than 119,000 donors.

The third annual Fidelity Charitable Giving Report released today details the donor-advised fund’s statistics for 2014 and surveys more than 1,000 donors about their giving habits and why they give to a DAF.

“The number of donors is growing each year by leaps and bounds,” said Matt Nash, senior vice president of donor engagement for Fidelity Charitable in Boston, Mass. “2014 was a record year in almost any statistic that we have,” he said.

The average grant size was $4,138 in 2014, steadily increasing the past three years but down from an average $4,531 in 2005. The average number of grants per account has consistently grown each year, from 5.2 in 2005 to 8.3 last year. “As more people are involved with it over time, they tend to give more of their donations to these charities,” Nash said.

Approximately 60 percent of giving accounts have balances of less than $25,000 while 5,584 accounts have balances of $250,000 or more. Among the 72,170 giving accounts, the median balance is $16,097.

The number of charities supported by Fidelity DAF donors has doubled in 10 years, from 46,574 in 2005 to 97,543 in 2014, increasing just about every year.

The number of grants of $1 million or more had been consistent since 2005, about 70, until 2010 when the number grew and then jumped in recent years, reaching 272 last year.

Education had the largest percentage of grant dollars, 29 percent, but the third-highest percentage of grants, at 15 percent. Religion garnered 27 percent of grant volume last year but 17 percent of grant dollars. Society Benefit was third in percentage of grant dollars (14 percent) but fourth in grant volume (8 percent). Human services ranked second in grant volume (18 percent), but fourth in grant dollars (11 percent).

“The amount of donors we have, it’s probably a good cross-section of the sector,” Nash said.

Sixteen charities received grant recommendations from at least 1,000 giving accounts, led by Doctors Without Borders USA, which received support from more than 4,000 accounts, and The Salvation Army, from more than 3,000 accounts.

Doctors Without Borders is typically among Fidelity’s most popular charities but jumped to the top spot last year probably due to donor response to the Ebola crisis. Across all organizations, Fidelity donors recommended almost $5.5 million in grants for Ebola relief. Donors recommended a total of $172.7 million to support international charitable organizations.

Among the other charities that received support from 1,000 or more accounts were:

  • American National Red Cross
  • Wounded Warrior Project
  • Habitat for Humanity
  • St. Jude Children’s Research Hospital
  • The Nature Conservancy
  • American Cancer Society
  • Church of Jesus Christ of Latter-Day Saints
  • American Heart Association
  • Harvard University
  • National Multiple Sclerosis Society
  • Pan-Mass Challenge
  • U.S. Fund for UNICEF
  • Oxfam America
  • Dana-Farber Cancer Institute

Almost half of contributions are typically publicly traded securities, such as stocks, bonds or mutual funds, but there is a small but growing number of donors, about 9 percent, who are giving non-publicly traded assets. Last year, there were 532 contributions of non-publicly traded assets — such as private or restricted stock and limited partnership investments — compared with 283 in 2010.

More than three-quarters of donors said they use a DAF because of the ability to donate appreciated stocks. Another 27 percent said it’s because of a financial windfall, like an inheritance or sale of a business. Nine out of 10 donors said the set up a DAF to realize an immediate tax deduction and 78 percent to potentially minimize capital gains taxes. Almost three out of four said tax advantages allow them to give more to charity.

Donors are using their accounts for more strategic purposes, larger gifts, to charities they’re more familiar with, or a one-time gift. They use cash for more casual giving, such smaller donations of $50, responding to a donation request from a friend or family member, direct support of an individual in need, or giving directly through a charity’s website.

Giving account assets that invested to take advantage of the stock market’s nadir in 2008 have seen returns grow and investment growth has generated $3.6 billion in additional charitable dollars.

“It’s more planned in terms of who they’re thinking about for their philanthropy. It starts with appreciated assets into bringing into their account. From there, what we saw from the overall focus was on planning,” Nash said. “They’re looking at their high income and appreciation years, and donating more to their donor-advised funds so when they’re in their retirement years, they’re able to support causes they believe in.”

Based on a first-in, first-out methodology, the majority of funds are distributed within a decade of their receipt, according to the report. For instance, 99 percent of the $500 million contributed in 1995 would have been granted out by last year. Fidelity Charitable estimates that $19 billion has been granted to charities since inception, or about 63 percent of contributions. For every $10,000 contributed from 1996 to 2000, $500 remained to be granted by 2014, according to Fidelity.

For more on the growth of donor-advised funds, see “The Great DAF Debate,” from the March 15 edition of The NonProfit Times.