Charitable giving bolstered by improving economy

Schwab finds individuals granted out more this year as stocks soared and tax changes hit home

Jul 15, 2014 @ 12:14 pm

By Alessandra Malito

Numbers for Schwab Charitable, a national donor-advised fund where investors receive immediate tax benefits but make grants over time to their chosen charities, has grown tremendously during its fiscal year 2014.

Individuals granted out $822 million from July 1, 2013, to June 30, 2014, up from about $600 million the previous year, to 34,500 charities. Schwab Charitable also reported assets under management of $6.4 billion, up from $4.8 billion last year.

“Schwab Charitable's results this past fiscal year are heartening as they point to an upward trajectory in charitable giving,” Kim Laughton, president of Schwab Charitable, said in an e-mail. “Investors are now fully focused on granting, with a robust stock market and the economy continuing to improve, and major tax changes behind them.”

Ms. Laughton said the uptick in grants was a result of donors responding to the new tax policies that took effect in 2013, such as the American Taxpayer Relief Act of 2012, where the top marginal tax rate was increased for high income earners and therefore increased the value of charitable deductions. They also found encouragement from an improving economy.

Donor-advised funds, which provide immediate tax benefits from donations but make grants over time to the chosen charities, have proved beneficial to investors as well as charities. More than 45% of the funds contributed to Schwab Charitable accounts have been granted out to charities since the organization first started in 1999, according to the firm.

“RIAs who help clients think about their philanthropic goals with the same level of purpose that they think about retirement, college savings or even insurance goals are providing a differentiated level of advice and client service that can translate into real business results,” Ms. Laughton said.

It turns out RIAs have been more open to discussing charitable planning in their businesses in response to growing interest by investors, according to the fiscal year report. Schwab Charitable accounts grew by 17% in fiscal year 2014. Charitable planning is one of the top three services RIAs perform in their practices aside from the core investment advising function. It falls right below long-term financial planning and advice on employee-sponsored retirement accounts, and is followed by estate planning, according to the 2014 Independent Advisor Outlook from Charles Schwab.

Schwab Charitable will expand their investment options available to donors in August by adding a new Income Index Pool. The underlying fund for the new pool is Dreyfus Bond Market Index Basic.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Why does social media matter for financial advisers?

Social media is a reflection of who you are. But who are you as a financial adviser? Debra Bednar-Clark of DB+co offers some solutions to enhance your practice.

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

RIAs struggle to keep clients grounded amid stock market euphoria

With equities at record levels, financial advisers are confronted with realities of greed and fear.

Regulators showing renewed interest in cracking down on investment fees

SEC, Finra targeting high-fee share classes, 12b-1 fees and failure to give sales load discounts and waivers to investors.

Tax update: Brady says sales tax deduction in final bill

Taxpayers will be able to deduct state income taxes or state sales taxes in addition to property levies — up to a $10,000 cap.

Complexity of new indexed annuities causing concern

Insurers are using 'hybrid' indices as a way to differentiate themselves, but critics contend the products are less transparent, more confusing and don't add financial benefit.

Critics say regulation hasn't curbed overly rosy projections for indexed universal life insurance

They say rule didn't go far enough and more stringent measures may be necessary.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print