Fidelity Charitable Reports 14-Percent Increase In Grants

The largest donor-advised fund (DAF) in the United States distributed a record $1.6 billion in grants during the first half of 2016, an increase of 14 percent over the same time period last year.

Grants by donors to Fidelity Charitable totaled $3.3 billion for the fiscal year running June 2015 to July 2016 – an increase of 15 percent over the previous year. The volume of grants increased by 8 percent – to more than 330,000 – in the first half of 2016 compared to the same time period last year.

Boston, Mass.-based Fidelity Charitable calculated a payout rate of 26 percent for Fiscal Year 2016. The rate is determined by dividing fiscal year grants by a five-year rolling average of year-end assets.

Fidelity did not include an estimate of contributions to the DAF in 2016 as figures have yet to be audited. Unaudited estimates put the 2016 figure at almost $4.1 billion although a spokesperson emphasized that’s not an apples-to-apples, year-over-year comparison. In 2015, contributions to Fidelity totaled $4.6 billion, with net assets of $15.25 billion.

The rapid growth of DAFs in recent years has come with increased scrutiny of distributions. Some critics contend that without requiring or reporting payout rates, DAFs become a way station of sorts for charitable contributions, with donors receiving the tax deduction but the dollars not immediately going to charity.

The announcement comes days after Schwab Charitable reported $1.2 billion in grants during Fiscal Year 2016, an increase of 12 percent from 2015. More than 56,000 charities received grants, up 30 percent from the 42,000 recipients in the previous year.

Schwab Charitable also reported a total $1.9 billion in contributions during the fiscal year that ended June 30, down from $2.1 billion in 2015.

The first donor-advised fund was created in 1931 but the adoption of DAFs was limited until Fidelity Charitable launched the first national program 25 years ago. Today, more than 1,000 organizations offer DAFs and collectively granted $12.5 billion in 2014, according to National Philanthropic Trust’s most recent Donor-Advised Fund Report.

As of June 30, Fidelity had made $23.4 billion in donor-recommended grants since it was founded. Fidelity is announcing a challenge to its donors to eclipse a milestone of $25 billion granted in 25 years by Dec. 31.

Nearly two thirds of donors have consistently said they give more because of their DAF. Investment growth, the ability to easily contribute appreciated assets, and simply having a dedicated account for charitable giving all influence donors to support the causes they care about at higher levels, according to donor surveys.

Since its founding 25 years ago, Fidelity Charitable has seen growth across all areas:

  • Annual grant volumes have jumped from over 3,600 to more than 750,000;
  • Total grant donors in a year rose from $14 million to $3.3 billion;
  • The number of giving accounts increased by 4,000 percent to 82,539;
  • The average grant size increased from $3,900 to $4,300, with the number of grants made per account increasing from 1.9 to 9.2; and,
  • Almost 90 percent of grants are now recommended online.