News and analysis
July 15, 2015

Fidelity and Schwab Report Surge in Grants From Donor-Advised Funds

Fidelity Charitable reported Wednesday that grants from its 75,000 donor-advised funds rose 32 percent to $2.9 billion annually. Schwab Charitable, another commercial donor-advised fund giant, also reported strong gains — 30 percent, to more than $1 billion annually.

Both organizations’ 2015 fiscal years ended on June 30.

Fidelity’s assets rose from $12.8 billion in the 2014 fiscal year to $14.9 billion. Fidelity’s payout ratio was 23 percent when comparing fiscal 2015 grants with the prior year’s assets, a common way to measure payout ratios.

However, in its news releases Fidelity emphasized a higher payout ratio, using a five-year average of its end-of-year assets compared with grants in fiscal year 2015. This calculation produced a payout ratio of 28 percent, because Fidelity’s assets have grown substantially in recent years.

"By any measure, our payout rate is significant, which reflects an active and engaged donor base," said Amy Danforth, president of Fidelity Charitable.

Fidelity reported that its assets grew 16 percent in fiscal year 2015 because of increased contributions and investment gains.

During the first half of the current calendar year, Fidelity notched 310,000 donor-recommended grants, a record for the charity. As a donor-advised fund, Fidelity has the authority to make grants but does so in consultation with donors who open accounts with them.

Big Gifts Lead the Way

The surge in grant making was driven primarily by increases in the amount that came from larger gifts. Fidelity said it recommended 166 grants of $1 million or more during the first six months of this year. Those big grants totaled $329 million, a 60-percent increase over the first half of 2014.

The average grant size was $4,700, Fidelity said.

"The donor-advised fund is an alternative to a private foundation" for many donors, said Amy Danforth, president of Fidelity Charitable, in an interview. She said it is becoming more common for donors to set up funds in the $10 million to $50 million range instead of either setting up a foundation or making donations that are "off mission" from the foundations that donors already run.

Ms. Danforth said 68 percent of contributions made to Fidelity’s funds were in the form of appreciated assets, up from 57 percent during the similar period last year.

The fund also released updated guidance for donors who want to help in the Nepal recovery efforts. Through June 30, Fidelity made more than 5,800 grants totaling nearly $7.8 million to help Nepal recover from April’s devastating earthquake. The new guidance provides a list of a dozen recommended charities working there and identifies several priorities including shelter, sanitation and public health, child nutrition, and education.

(Editors note: This story has been updated to provide additional figures about Fidelity Charitable’s payout rate.)

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