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DAF Grant Payouts Surge In 2018 - Schwab Charitable

Tom Burroughes, Group Editor, November 14, 2018

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One of the prominent providers of donor advised funds says grants paid out have risen sharply so far this year.

Grants donated to charity rose sharply last year but a prominent operator in the space argues that there is more potential to give, and urged donors to consider using tax incentives to the full.

Schwab Charitable, which is an independent charity body and serves some affiliates of brokerage and investments giant Charles Schwab, said donors recommended $1.4 billion in grants from January through September of this year - a 42 per cent year-on-year jump.

The organization is one of the major players in overseeing donor advised funds, a structure enabling individuals to amass a portfolio of assets and transfer them to causes they favor. DAFs are a significant chunk of the US philanthropy space and similar entities exist in countries such as the UK. Another large player in this area is Fidelity Charitable.

New tax laws introduced last December, such as the doubling of estate tax reliefs and other changes, raised questions on whether this would blunt the urge to give, but so far that does not appear to have happened. Tax incentives remain in place, Kim Laughton, president of Schwab Charitable, said in a note.

"The new tax code retains the significant benefits of contributing non-cash assets to charity and many investors may face a higher tax bill this year," Laughton said. "The new tax code allows some donors to benefit from both the increased standard deduction and the charitable deduction."

Laughton also pointed out that non-profits often need grants at the year end to meet annual targets, and well-timed grants can provide extra impact for causes including disaster relief efforts.

Articles considering the pros and cons of donor advised funds and private foundations, a different model, can be viewed here and here.




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