Key Takeways

  • Donors have been giving at a record pace to support impacted communities.
  • Most donors plan to maintain or increase charitable donations this year. 
  • A strong stock market may make it easier for people to donate.

Donor-advised funds are showing substantial increases in grants to organizations as well as in inflows to the funds themselves during the pandemic, according to data from Fidelity Charitable, Schwab Charitable, and Vanguard Charitable. All three are independent 501(c)(3) organizations and three of the larger donor-advised funds.

In response to the economic impact of the virus, donors greatly stepped up their support for organizations that provide basic daily care like food and shelter.

During the first half of 2020, Schwab Charitable saw a 46% increase in dollars granted and a 44% increase in the number of grants to charities compared with the prior year.

Other donor-advised funds have reported similar increases. Vanguard Charitable reported a 51% increase in 2020. The organization granted $1.7 billion through more than 165,000 grants to nearly 46,000 different charities. 

Several factors—an active giving season, generous COVID-19 relief efforts, and sustained giving—boosted donations, according to Vanguard Charitable. Research has shown that giving from donor-advised funds tends to be resilient during economic downturns, because dollars have already been allocated for a charitable purpose.

The CARES Act allows people who don't itemize deductions to claim up to $300 for contributions to charity as an above-the-line deduction. It also lets cash deductions be 100% of adjusted gross income instead of 60%, but this provision excludes gifts to donor-advised funds.

Where the Money Goes

Free food programs were an overwhelmingly popular grant recommendation, according to Fidelity Charitable, which reported a staggering increase over the previous year. At this point last year, says Kristen Robinson, senior vice president of Fidelity Charitable, donors had given $9.7 million to free food programs. “That has increased to $75 million, which is a 667% increase [as of May],” Robinson said.

Donors in 38 states and Washington, D.C., overwhelmingly favored local food banks, according to data from Fidelity Charitable.

Not only has there been a tremendous increase to food pantries and agencies that provide shelter, Robinson says, “but in addition we’re finding [donors are] continuing to stay the course, giving to the organizations they gave prior to COVID-19, like the arts.”

A relatively strong stock market could also be helping to drive donations. Despite recent market volatility, the S&P 500 is up more than 50% over the past five years, so many donors may still be in a good position to contribute long-held appreciated assets. In fiscal year 2020, 64% of contributions to Schwab Charitable were non-cash assets, including publicly traded securities, restricted stock, and privately held business interests.

Tax Advantages to Giving

Donors who give long-term appreciated assets, such as stocks, bonds or real estate, may be able to take advantage of tax efficiency by not paying capital gains, and can take an income tax deduction for the full fair market value.

Donate to charity long-term appreciated assets instead of cash: You avoid capital gains and can deduct the full fair market value of the asset

Just over two-thirds of contributions to Schwab Charitable were in non-cash assets, such as publicly traded securities, restricted stock, and privately held business interests.

The passage of the CARES Act in March gave donors the option of claiming an above-the-line deduction of up to $300 for cash contributions to charities on top of the standard deduction.  It also permits deductions for cash donations to be at 100% of adjusted gross income instead of 60%, but this provision excludes giving to private nonoperating foundations and supporting organizations, along with any contributions made to establish or maintain donor-advised funds.

Donations Continue Steady

Most donors plan to maintain or increase the amount they donate to charity this year, according to Fidelity Charitable. A quarter of donors told the organization they plan to increase their donations in response to the coronavirus, while 54% plan to maintain their giving levels.

Younger generations plan to step up their donations in greater numbers: 46% of millennials say they will give more in response to the pandemic, compared with 14% of baby boomers and 25% of Gen X. Of those who say they will decrease their donations to charity, concern over a recession and the economy in general was a top trigger.

“When the market softens or there is [some natural] disaster, donors are extremely generous,” Robinson said. During the Great Recession, Fidelity noted that donors maintained or even boosted their giving during that time.