Earlier this summer, three reports on philanthropy highlighted the ongoing strength in charitable giving. As we experience inflation and market volatility, charitable giving will continue to play an important role in supporting our communities.
The annual Giving USA report shares research conducted by the Indiana University Lilly Family School of Philanthropy, estimating all giving to charitable organizations across the US. Released this June, the 2021 Giving USA report noted that overall giving held relatively steady at $484.9 billion, a 0.7% drop from the 2020 total of $488.1 billion. (The researchers adjust for inflation when making percentage change comparisons.)
One notable shift in giving between 2020 and 2021 was in the area of Arts and Culture. Arts organizations experienced a 7% decrease in support in 2020, which one can attribute to canceling of exhibits and performances, as well as donors’ concerns about basic human needs during the pandemic. In 2021, donors recognized the importance of arts & culture organizations to a community’s overall vitality with donations that increased by almost 22%, the largest increase in 35 years.[1]
In July, two Donor Advised Fund (DAF) managers that partner with Heritage announced increases in charitable giving. Schwab Charitable reported a 27% increase to over $4.7 billion in grants through its DAFs in fiscal year ending June 30, 2022[2], and Fidelity Charitable announced grants totaling $4.8 billion in the first half of 2022, which is an 11% increase over the previous year[3]. The increase in giving comes despite market cooldowns and inflationary pressure.
In my opinion, the reports from Schwab and Fidelity show the value of DAFs as a way to maintain or increase charitable giving during times of economic downturns. And one could argue that is when philanthropy is most important when “times are tough.” Whether established through a Community Foundation or a commercial fund, DAFs can provide a steady and consistent resource for philanthropy.
If a donor contributes appreciated stock to their DAF, the gains can be harnessed for future charitable giving. Depending upon an individual’s goals and concurrent investment strategy, DAFs can serve as a reserve to respond in times of urgency. As an illustration, even at a time when the market was experiencing a decline and personal balance sheets may have been affected, DAF donors at Fidelity were able to direct over $128 million to Ukraine aid efforts in the first half of 2022.[4]
Determining your best options for charitable giving can be overwhelming. Multiple vehicles are available (DAFs, private foundations, charitable trusts), many community issues of are importance, and urgent charitable causes continue to emerge. Your personal approach will boil down to what matters most to you and your family. If you would like to expand and explore what drives your giving, reach out to us at Heritage Wealth Advisors. We would be happy to help.
[1] June 21, 2022, https://www.philanthropy.com/article/2021s-surprisingly-strong-giving — subscription required
[2] https://www.schwabcharitable.org/press-releases/fiscal-year-2022-results
[3] https://www.fidelitycharitable.org/about-us/news/fidelity-charitable-donors-recommended-4-8-billion-in-first-half-of-2022.html
[4] Ibid.
