“Our research uncovered remarkably low awareness and use of the full range of tax-advantaged giving methods,” said Matt Nash, senior vice president of Donor Engagement at Fidelity Charitable. “This giving gap may limit potential savings and prevent people from giving more to the deserving charities they support.”
The survey asked affluent and high net-worth donorsi to indicate their familiarity with and use of nine different charitable giving methods,ii and explored how annual gift size, wealth, age, and advisor relationships affected awareness and use. Of those surveyed, 92 percent said that charitable giving is equally or more important to them than other financial priorities. Despite that common commitment to giving, about half said they donate financially to charity using only cash, checks, or credit card payments. Most did not know about the range of giving options available to them.
That lack of knowledge translates into low use. While nearly 80 percent of those surveyed owned appreciated assets, such as stocks, mutual funds or bonds, only 21 percent had ever contributed those assets to charity. While nearly 90 percent of donors had a retirement or life insurance plan, only 9 percent had named a charity as abeneficiary of the plan. Among the factors that influenced awareness and use levels:
• Retirement status. Retirees give to more charities than those working full time, but they are less likely to report they are confident they can give at the same level in the future—and also less likely to be using a giving vehicle. For example, just 39 percent of retirees are using methods such as donating appreciated securities or a distribution from an IRA, compared to 50 percent of those working full time.
• Age. Charitable donors under age 50 are much more likely to use more efficient charitable giving methods than their older counterparts, despite their lower overall wealth.
• Going with a Pro. Fifty-three percent of charitable donors have discussed charitable planning with an advisor. While those who have done so are more likely to understand the greater variety of charitable giving vehicles available, they are not any more likely to put this knowledge to use in their giving practices.
• Gift size. Those who give a significant amount – more than $20,000 to charity each year – are also those most likely to know about and make use of giving methods beyond cash, credit card and check. Even so, a quarter of these donors are not using any of these giving methods.
“Frankly, we were surprised to uncover this awareness gap. Americans have a strong commitment to philanthropy, but those who give have varying understanding of the range of ways they can support their favorite causes,” said Brian Deacy, national fundraising manager for Fidelity Charitable. “While advisors are doing a good job discussing charitable planning, there is certainly ample opportunity for them to add value by helping educate their clients about the smartest ways to give.”
Learn More about Charitable Giving Methods
There is a broad range of charitable giving methods available to donors. Using specific giving methods may make planning easier. Others may help create tax savings, and some giving methods may enable donors to give more to the charities and causes they care about. Donors, nonprofits and advisors can benefit from the results of this survey, which show that:
• Donors should speak with an advisor to discuss the range of vehicles or options available and how they might fit into their broader financial plans, particularly as they begin planning for next year.
• Nonprofits should consider helping their most valuable donors understand the variety of assets that can be donated and vehicles that can be used in order to maximize their opportunity with those donors.
• Advisors have an opportunity to bridge the gap between understanding and use of different giving strategies. Doing so may help clients at all levels understand the benefits of using a range of strategies and vehicles to fund their giving.
Download The Giving Gap.
