Friday, March 24, 2023

3 trends shaping philanthropy in 2022

The world seems to be in a constant state of “phenomenal” and the philanthropic sector is no different. To better understand what might happen in 2022, it’s important to look back and consider the trends we saw last year. In that effort, Fidelity Charitable Produces an Annual Giving Report based on the charitable activity of the year. Whereas Data is specific to Fidelity Charitable Donors, the story it tells is emblematic of the philanthropic sector at large, and emerging trends can help us anticipate and embrace what the future of giving looks like in America. Three key themes stand out in this year’s Giving Report: relentless generosity in the midst of challenging times, the increased sophistication of donors, and the next generation that lies ahead. Let’s dive

Relentless generosity in the midst of challenging times

The first instinct is straightforward and enjoyable: Americans are giving more than ever! Flash back to 2020, when communities across the country first faced the COVID-19 pandemic. According to the Giving USA 2021 study, charitable giving increased to a record-breaking $471 billion in 2020, as natural disasters and racial injustice hogged the limelight. This was an increase of 5.1% compared to 2019, despite a 2.3% reduction in GDP. There was a significant increase in charitable dollars going to the human services sector, which includes organizations such as food banks and homeless shelters.

Following this spike, many predicted philanthropic activities will return to pre-pandemic patterns in 2021. Instead, Americans doubled down. Last year, Fidelity Charitable Donor recommended $10.3 billion in grants to their favorite charity – a 13% increase over 2020 and a 41% increase over pre-pandemic levels!

Charitable giving has increased in 2022, as donors see the humanitarian crisis in Ukraine and rush to send support. (If you’re looking for ways to help, review this guidance.) In response to such unexpected events, more and more people are looking for ways to help those in need—and as quickly as possible. Looking for ways to reach them. Individuals with donor-advised funds refer to their accounts as “ready reserves” to offer this type of assistance.

This continued focus on charitable donations supports a historical pattern that during challenging times, Americans respond with philanthropy.

increased sophistication of donors

While the numbers have gone up, so has the sophistication with which people are giving. There is growing interest in smarter, more strategic ways to give back to charities. They want to take advantage of tax benefits and favorable market conditions when they become available.

A common first step to do this is to use a vehicle such as a private foundation, charitable trust or donor-advised search. Donor Aided Fund is the fastest growing charitable giving vehicle today. According to the National Philanthropic Trust 2021 DAF report, the number of donor-aided funds increased from 290,111 in 2016 to over one million in 2020.

Why are so many Americans attracted to donor-aided funds? Hear straight from Gwynedd Benders, a stay-at-home mom in Oregon who supports local causes, including food insecurity and environmental protection: “Having a Giving Account Makes taxes and accounting very easy. This allows us to track our giving to see if we are meeting our goals. And once we set that money aside in the account, it cannot accidentally be included in our daily household budget.

In addition to the vehicle’s ease of use and low cost, many donor-advise donors to donate vested shares of company stock from non-cash assets, such as stocks, privately held business interests or other non-traditional sources such as equity compensation. Turning to the fund. (See my previous article on How to Choose the Right Asset to Give!) For example, as the price of bitcoin climbed in 2021, Fidelity Charitable saw a nearly twelvefold increase in cryptocurrency donations.

These smarter giving methods help donors give more while saving more on taxes. They also benefit from the ability to invest their funds tax-free for potential growth while they decide which charitable causes to support. With such strong market conditions last year, donors were able to give more to the causes that mattered most to them.

the next generation moves on

Over the next two decades, Cerulli Associates expects the younger generation to inherit $73 trillion. How much of that huge amount will be redirected towards charitable causes? According to a study of 4,000 donors, We can expect a lot.

In a recent Fidelity Charitable study, nearly three-quarters (74%) of Millennials said they consider themselves to be philanthropists – compared to just 35% of Boomers. The Millennial generation is now between the ages of 25 and 40, and they are bringing a new approach to giving back; They are empowered to make the world a better place, and therefore, make everyday decisions—such as where to work, what products to buy, and where to invest their savings—through a charitable lens.

This insight is reflected in the activity we see from Fidelity Charitable Donors, who are increasingly aligning their investment choices with their values. In 2021, a $3 billion giving account Funds were allocated to impact investments, compared to $1.8 billion in 2020. The growing popularity of impact investing signals a shift that the next generation is driving, from a charitable giving to a charitable living. (More to come from me on Impact Investing later this year!)

To implement these tax-savvy and value-based strategies, the next generation will depend on experts. In fact, according to a study conducted by AIG Life & Retirement last year, eight in ten (79%) Millennials would like to work more closely with a financial professional, compared to 59% of Generation X and 18% of Boomers. .

Knowing this, consultants should be proactive in creating charitable planning and offering strategic ways for clients to maximize their donations. Rest assured, this is a win-win for both the client and the advisor. Research has shown us that clients who receive charitable plans are more loyal and more likely to recommend their advisor than clients who do not, as measured by a higher Net Promoter Score. (NPS). The consultants who offered the charitable plan had an NPS of 67, while those who did not offer the charitable plan had an NPS of 49.

As I consider these trends shaping the future of philanthropy in America, I remain hopeful. Whether you are a young individual, a family in the midst of a legacy plan, or a consultant mentoring their clients, we each play an important role that helps make an impact and, ultimately, make a difference. .

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
Latest news
Related news