Donor-Advised Funds Continue Surge
Though overall giving has been erratic as the market roils, one giving vehicle that has continued to see increased donations is donor-advised funds, accounts run by sponsors such as Fidelity Charitable, Schwab Charitable and Vanguard holding monies that the donors can direct after they've made contributions. Giving USA doesn't break out the numbers for donor-advised fund growth, but says that all the major players in the area have reported year-over-year increases in contributions.

Schwab Charitable says it saw donor advised fund contributions increase 11% from fiscal 2009 to fiscal 2010, and 30% from fiscal 2010 to fiscal 2011.

"Our contributions are actually up over the summer pretty substantially, and our granting is actually up 20% year over year," says Kim Laughton the acting president of Schwab Charitable. "What ends up happening is that whatever happens with the stock market in the last few months of the year will really in many ways dictate how good of a year it is for giving."

Furthermore, she says, a lot of people are still holding on to appreciated securities that have risen greatly in the last two years, and that will also determine how much people donate. (Appreciated assets made up 68% of the contributions in fiscal 2011, Schwab Charitable says.) "So it's still a lot of room I think for people to be giving charitable contributions and using appreciated stock to do so, which is really the bread and butter of what we do."

Fidelity Charitable, which launched the first donor-advised fund 20 years ago, saw its 2010 contributions rise 42% to $1.6 billion, and it saw $512 million in donations in the first half of 2011, a 30% increase from the same period the year before, says Amy Danforth, a senior vice president at Fidelity Charitable. The fund gave away $604 million in first half, a 14% increase from the year before.

"In terms of Fidelity Charitable, we're having our strongest year that we've had since '07," says Fidelity's Danforth. "Our first half results were super strong and we're really gratified by the growth that we're experiencing. We also have a generous pipeline of potential deals that are being covered by our charitable planning consultants.

"Having said that, certainly where there's market gyrations and the kind of volatility that we're seeing, national donor advised funds are sensitive to the market in a way that general giving is not. In the downturn of '08 and '09, donor advised funds were off much more significantly than general giving."

Appreciated Assets
However, many assets have appreciated since the 2008 downturn, and these are prize targets for contribution, since the donors don't have to realize the gain on the appreciated asset if they give it the same way they would if they sold it, which generates capital gains taxes. Instead, they can donate it, forgo the capital gains tax and also win a hefty charitable tax deduction of the asset's fair market value. The huge surge in assets in the last couple of years from the stock market nadir in March 2009 means lots of people will have appreciated stock to donate.

That dovetails with another trend, says Danforth: the number of people with complex assets to donate-C corp and S Corp stocks, restricted stock, real estate, limited partnerships, and assets transferred or sold in a merger and acquisition. Danforth says Fidelity's complex asset contribution tripled in the first half of the year from the year before, rising to $41 million, or 8% of the $512 million total.

To keep up with the increasing interest in these types of donations, Fidelity Charitable has expanded its consultation services and planned several seminars in major cities to help advisors work through the thorny requirements of donating these types of assets, a process that must be done to the letter if the IRS is to recognize the gift. The donor has to sign a gift agreement, and the charity has to do thorough legal due diligence, a process that requires the charity to assess the marketability of the asset and make sure the facts around the donation pass the smell test with the IRS, which can look back over three years to determine whether or not the donation was up to snuff.