Wednesday, November 10, 2010

Donor-Advised Funds Surged In 2010

Donor-advised funds, where donors get an immediate tax break for depositing money that eventually will go to charity, are reporting increased contributions and payouts as investor portfolios rebounded with the stock market during past 18 months.

Contributions to Schwab Charitable were $610 million for 2010, through Sept. 30, up 274 percent from the same period last year, and up 90 percent for the same period in 2008. Grants to charities totaled $262 million for the same period, up 15 percent from 2009 and up 3 percent from the previous all-time high in 2008.

San Francisco-based Schwab Charitable reported a continued increase in gifts of appreciated securities, up from 68 percent to 74 percent of total contributions in the last two years, driven by a healthier stock market.

The stock market has increased roughly 70 percent from the lows of early 2009, and many donors are choosing to donate appreciated securities to their donor-advised funds, maximizing tax benefits while meeting philanthropic goals.

The nation’s largest donor-advised fund, The Fidelity Charitable Gift Fund, reported grants of $531 million for the first six months of 2010, up 16 percent compared to last year. It was the strongest first half in the fund’s 19-year history.

Contributions to the Boston-based Fidelity fund were up 67 percent and new account openings increased 19 percent. Contributions in the form of appreciated securities made up more than half of all contributions to the gift fund, compared with a third of all contributions during the same period in 2009.

Incoming contributions during the fiscal year ending June 30, 2010 were $1.3 billion, up 39 percent from the previous fiscal year, while donors recommended grants of $1.1 billion to charities, up 11 percent. The fund ended the fiscal year with almost $4.4 billion, up 15 percent of the last year.

Invested assets at Malvern, Pa.-based Vanguard Charitable Endowment Program total $2.1 billion compared to $1.94 billion a year ago. New accounts established this calendar year, through September, is up 80 percent over the same nine months in 2009, with every month in 2010 better than last year, with the number of grants up 11 percent this year. The number of additional gifts in 2010, through September, is up 38 percent over the same period in 2009, with all but one of the nine months showing material increases.

Is your organization seeing more donations from these types of funds or do you think the cash is just sitting in a personal account with the minimum being contributed?