Despite experiencing the worst stock market returns since the 2008 financial crisis, philanthropists who gave through Schwab Charitable, increased their generosity during 2022, Schwab Charitable reported today.
Donors gave more than $4.7 billion in grants last year, a $300 million, or 7%, increase over calendar year 2021. The rate of increased growth slowed somewhat since it was calculated for fiscal year 2022, which ended June 30, 2022. At that time, the rate of increase was 27% when fiscal year 2021 was compared to fiscal year 2022, Schwab Charitable, a provider of donor advised funds and other charitable giving resources, reported in mid-2022.
A record 995,000 grants were made to 117,000 charities for calendar year 2022, with one in four grants going to charities the donors had not supported in the past, Schwab Charitable said.
“The impact of the volatile market has been felt across the board, and it has shown the beauty of a donor advised fund,” Fred Kaynor, managing director of relationship management, marketing and strategic partnerships at Schwab Charitable, said in an interview. “Philanthropists can put money into the fund when markets are good or when they have a significant financial event, and then it is available for grants when the need is greatest; and the need has been particularly great recently.”
“I’m so grateful to see how our donors continue to increase their giving, despite a tough year with economic uncertainty, natural disasters and global crises,” Sam Kang, president of Schwab Charitable, said in a statement. “Our donors combine consistent support for their favorite causes with a willingness to open their hearts and wallets to new charitable organizations as unforeseen needs arise.”
2022 was the worst year for U.S. stock markets since 2008, as the outbreak of war, devastating hurricanes and global humanitarian crises fueled recession fears, the report noted. But, in each month of 2022, donors recommended more grants to charity than in the same month in 2021, Schwab Charitable said.
“Last year showcased the resilience of donor-advised funds at a time when charitable giving has never been more important,” Kaynor said. “Many donors remained in a strong position to grant to charities because of previous contributions of both cash equivalents and non-cash assets to their donor-advised fund accounts. As a result, they were able to meet their philanthropic goals despite the market volatility and economic uncertainty in 2022.”
Schwab Charitable works with The Center for Disaster Philanthropy to provide donors with lists of pre-vetted charities supporting relief and recovery efforts for crises across the world as they occur. In 2022, donors increased the number of grants to organizations recommended by the center by 33% compared to 2021, the report said. “This is an unprecedented level of giving using this very helpful tool,” Kaynor said.
Donors also are making more giving more grants to charities with no restrictions on how the money is to be spent so that charities can use the funds where they are needed most. Seventy-one percent of grants made last year were unrestricted.
“There were a record number of disasters, both humanitarian and natural, that peaked interest in giving in general, but also in giving unrestricted grants. This is historical” because donors are realizing charities need to be unfettered to meet specific disaster needs, Kaynor said.
Financial advisors often work with clients using donor advised funds. Almost two thirds of grants made through Schwab Charitable were made by donors who employed financial advisors. “One way advisors help increase donors’ giving power is by facilitating donations of non-cash assets, such as publicly-traded stock or private business interests. Throughout 2022, 60% of contributions to Schwab Charitable were non-cash assets. Donating non-cash assets directly to charity can increase the amount available for charity by up to 20% by allowing donors to eliminate capital gains tax liability on the assets,” Schwab Charitable explained.
Schwab Charitable provides a number of resources to make it easier for advisors to guide their clients’ philanthropy so they can add value to their services, and other resources to help nonprofits hone their fund raising, Kaynor added.
Schwab Charitable has developed a Schwab Charitable Giving Guide; a Nonprofit Fundraising Toolkit for charities; a series of materials created in cooperation with the National Center for Family Philanthropy to help engage family members in giving; a tax savings calculator; and a charitable donation calculator.
In recent years, advisors have made charitable planning an integral part of their practice and a key component of wealth management conversations,” Julia Reed, national director of charitable consulting at Schwab Charitable, said in a statement. “Their value has never been more apparent than today. They continue to help clients navigate a challenging financial landscape to maximize their impact on charities.”
More increases in dollars and grant numbers should be seen in future months and years. “There is nothing to indicate our donors’ generosity will change,” Kaynor said.