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.
