Clients of Schwab Charitable were feeling exceptionally generous over the last year.
The donor-advised fund handed out $822 million in grants to 34,500 charities during the year ended June 30 -- a 38% increase over the previous 12-month period.
"We've been thrilled to see our donors granting as much as they have been," said Kim Laughton, president of Schwab Charitable, one of the country's largest such funds. "Part of it is the economy is recovering and the stock market is going strong again, so people are feeling more comfortable in sharing the wealth they have with charities."
Stable federal tax rates also have propelled more giving, she says. Two years ago, the so-called fiscal cliff showdown -- which stoked investor fears that the feds would dramatically increase estate taxes by Jan. 1, 2013 -- created uncertainty for many planning clients.
Also driving the giving is the increasing popularity of donor-advised funds like Schwab Charitable, Laughton says. These funds allow investors to get an immediate tax break by donating money into the fund; they can take time later to identify recipient charities.
These funds also simplify the process of giving both for the donor and recipient, Laughton says: "Rather than donate 10 shares of Apple stock to a charity," which creates paperwork headaches for charities, "you can donate it to your donor-advised fund and then turn around and give [the value of the shares] to your charity."
ASSETS ACCUMULATE
Assets in Schwab's donor-advised fund are accumulating as well.
Since its inception, Schwab Charitable has received over $9.8 billion in contributions and has facilitated more than $4.4 billion in grants to charities on behalf of its donors, according to a company release.
While more than 45% of its funds have been donated, Schwab Charitable reported $6.4 billion in assets under management as of June 30, up from $4.8 billion a year earlier.
Investors who donate into the fund have 13 investment options to choose from, with a 14th to be added on Aug. 1, Laughton says.
With minimum account sizes of $5,000, clients' charitable accounts currently range in size up to $800 million and above, she adds.
"We do cater to a huge range of clients," she says. "The larger accounts tend to gift out over generations."
GIFTS OVER TIME
Overall, the average distribution rate for Schwab's donor-advised funds is 20%, she says.
Funds that are aimed at building real estate and accomplishing major capital improvements typically gift large chunks periodically, she adds.
Charitable planning is one of the top three services offered by RIAs to supplement their core investment advisory business, according to Schwab's 2014 Independent Advisor Outlook study of 720 investment advisors -- outranking estate planning in popularity among investors and falling just behind long-term financial planning and advice on employee-sponsored retirement accounts, Schwab says.
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