Charitable Giving, Looking Back and Forward
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Donors were again very generous in their support of their favorite charities in 2022 despite inflation and poor performance across the financial markets. A recent report by the Fundraising Effectiveness Project, however, showed that fewer people made donations in the first nine months of the year, which continued a trend in recent years. Fortunately, high-end donors continued to make generous donations, and this helped to explain the 4.7% increase in overall dollars contributed. Forbes just reported that the nation’s top 25 philanthropists donated $27 billion in 2022 and MacKenzie Scott alone has contributed $14 billion in the past three years.
Thankfully, donors who had established and contributed to donor-advised fund (DAF) accounts in recent years provided badly needed grants. As was true during the initial COVID surge when galas were cancelled and fundraisers could not meet with donors, many of the one million donors with DAF accounts have continued to recommend grants and have maintained and often increased their grantmaking to help address needs in their communities and elsewhere. Schwab Charitable just reported that the dollars granted by its donors increased by 7% and the number of grants recommended by donors at the American Endowment Foundation, the DAF sponsor for which I work, increased by 13% in the past year.
And though returns in the financial markets were poor and some donors were less likely to donate publicly traded securities, donors were still determined to contribute directly to their favorite charities or initially to their DAF accounts. In talking with financial advisors, attorneys, and other DAF sponsors at the recent Heckerling conference, I learned that more donors than usual donated cash than in previous years. (Typically, the percentage of non-cash assets donated is 60-70%.) Additionally, donors continued to contribute other assets including real estate, privately held business interests, or restricted stock. Many of these alternative illiquid assets were donated to DAF sponsors since those sponsors are often more used to accepting them than individual operating charities.