How are organizations working with donor advised funds?

Donor-Advised Funds continue to grow in popularity and growth.  We recently noted this trend here as well.  Is Fidelity, which is but one option for the donor advised fund, really doing a better job promoting the tax-wise benefits of giving than all of our nation’s community foundations and individual charities?  What are they offering the donor that your organization is not?

The Fidelity Report suggests that 62% of donors/advisors are using the fund to continue their previous support.  That’s good news.  Reportedly 92% are also identifying themselves to the charity.  Again, good news.  But, what are these recipient organization’s doing with that information?  We suspect they are scratching their heads on how to acknowledge and recognize the gift.  We shudder to think how many annual reports across the country are acknowledging the Fidelity Charitable Trust as donors?  

We urge development officers to identify their constituents using donor advised funds, and to initiate discussions about other more significant ways to support their organization more directly.  When these constituents are identified, you now know that they are interested in tax-wise giving, that they may be interested in continuing their support into the future and that they are likely older.  All of these factors suggest they may be excellent candidates for deferred/testamentary and major gifts to your organization.  Yes, indeed we need to watch this industry development and find new ways to leverage this information.

Donor-Advised Funds Show Strong Growth and Giving, Fidelity Report Says

Title: 2015 Giving Report: a Deeper Look at Fidelity Charitable Donors and the Many Ways They Give

Organization: Fidelity Charitable

Summary: The third annual report on giving by people with donor-advised funds at Fidelity Charitable found more signs of economic recovery and increased giving last year than in 2013. For example, there were 272 gifts of at least $1 million in 2014, up from 185 in 2013 and 126 in 2012.

The number of donor-advised funds at Fidelity also continued to grow, to 72,170 last year, up from nearly 64,000 in 2013. Since its founding in 1991, Fidelity Charitable is now the nation’s largest commercially sponsored charitable fund and the second-largest grant maker in the nation after the Bill & Melinda Gates Foundation.

Last year Fidelity donors recommended $2.6 billion in grants to more than 97,000 organizations, up from $2.1 billion to 87,500 organizations in 2013. In the past decade, the number of charities receiving gifts from Fidelity Charitable has doubled, while the total dollar amount distributed and the number of individual donations that are $1 million or more have both tripled.

Most Donated Within 10 Years

Among the report’s other findings:

  • In a positive sign for nonprofit causes as the population ages, 62 percent of the 1,042 Fidelity donors who were surveyed for the report said they were using their donor-advised fund to keep giving to charities after retiring.
  • The number of gifts recommended in advance, either as a one-time gift in honor of a loved one or to occur at regular intervals such as monthly, are on the rise, accounting for 23 percent of all grants, an increase since 2005, when they accounted for 8 percent. Because this finding suggests that donors are increasingly making repeat gifts to their favorite causes, charities should ask for recurring gifts from people with donor-advised funds, said Amy Danforth, Fidelity’s president, in an interview.
  • Critics have said it’s difficult to identify people with donor-advised funds because so many of them give anonymously, but 92 percent of gifts made by Fidelity donors last year included names and addresses.
  • In response to other critics who argue that too much money is allowed to sit in the funds indefinitely, the report said more than 90 percent of the contributions are given to charities within a decade.
  • Since Fidelity Charitable’s inception in 1991, investments in the funds have earned $3.6 billion in interest, creating money to be spent on charity that would otherwise not exist.
  • While the average gift from donor-advised funds has remained steady over the years, at about $4,000, the average number of grants per fund has grown from five to eight.
  • Among Fidelity donors, the median account value was $16,097 last year, and 60 percent of the funds have balances under $25,000. More than 5,500 accounts have balances higher than $250,000. Donors with the largest accounts are more likely to engage family members in making gifts from their funds.
  • As in earlier reports, two-thirds of Fidelity donors said that having a donor-advised fund leads them to give away more than they would without such a fund. Women are more likely than men to talk to financial advisers about their charitable plans and to engage in deeper conversations about giving.