The Fidelity Charitable donor-advised fund program has become the nation's second-biggest charitable donor after the Bill and Melinda Gates Foundation, giving away $2.6 billion last year, according to a new report.
In its annual Giving Report, Fidelity Charitable said its donor-advised fund program has tripled over the last decade and is now second only to the Gates Foundation in total gifts. Granted, the Fidelity program is a bundler for nearly 120 donors. Yet the report highlights just how popular donor-advised funds have become in the philanthropy world, even as they have also become more controversial.
With donor-advised funds, charitable givers donate money to the fund and receive a tax deduction on the gift, but the money is allowed to sit in the account indefinitely. Donor-advised funds have exploded in popularity, surging to over $50 billion. Facebook founder Mark Zuckerberg and GoPro founder Nick Woodman have been big donor-advised fund givers, giving more than $1 billion and $500 million, respectively.
Yet critics say the funds benefit fund managers and donors more than society, since a large portion of the money is sitting in an investment account rather than being distributed immediately to charity. A study by the Congressional Research Office found that 25 percent of companies running donor-advised funds didn't make any charitable grants.
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Some in Congress have called for legislation requiring funds to distribute at least 5 percent of their assets to charity each year, just as private foundations are required to do.
Supporters of donor-advised funds say that on average, the funds are dispersing more than 20 percent of their money every year, so they oppose legislation. They also say the funds have encouraged charitable giving and brought billions to charitable causes.
In its report, Fidelity said its donors supported 97,000 charities last year, with donors recommending an average of eight grants last year. The most popular charity for donors was Doctors Without Borders-driven in part by the Ebola outbreak-followed by the Salvation Army and the National Red Cross.
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"Dedicated charitable accounts help donors take a thoughtful and impactful approach to their philanthropy," said Amy Danforth, president of Fidelity Charitable. "We are enabling donors across the giving spectrum―our median balance is about $16,000―to create more money for the charitable causes they care about and sustain their giving into retirement."