Nearly 6 in 10 donors may be giving more to charities despite economic fears, research shows

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With continued high inflation, stock market volatility and fears of a recession, it’s easy to see why some Americans might be cutting back on charitable giving.

But according to a study by Fidelity Charitable, a nonprofit that allows investors to donate through a so-called donor advisory fund called a charitable investment account, some donors may be looking at larger donations for 2022 because of that economic uncertainty.

Nearly 75% of those surveyed said they are concerned about other members of the community, and 64% are concerned about nonprofits amid the threat of a recession. As a result, 59% of donors this year may be willing to give more, according to the survey, which surveyed 969 donors to the nonprofit in July and August.

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Individual Americans donated an estimated $326.87 billion to charities in 2021, a 4.9% increase from the previous year, according to Giving USA.

While the organization predicted “a robust year” for giving in 2022, it also emphasized the link between philanthropy and the strength of the stock market. The report came out as the stock market approached record highs in December, but the S&P 500 is down more than 20% so far.

Donor-advised funds can make it easier to give

While some donors may not be certain about 2022, it may be an easier choice if you already have money in a donor-advised fund, allowing for upfront donation and the ability to choose recipients over time, he said. certified financial planner David Foster, founder of Gateway Wealth Management in St. Louis. A donor-advised fund is a charitable account for future donations.

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“You’ve already made that decision,” he said. “Now it’s a matter of doing it a little faster.”

Indeed, 67% of donors said they have given more to charity than without a donor-advised fund, the Fidelity Charity research shows, and 57% have used their account to ‘respond to an emergency or disaster situation’.

However, if someone hasn’t transferred money in advance, new donations for 2022 may be smaller than previous years due to lower income or lower account balances.

“My experience is that people still give about the same percentage of their income or assets,” Foster says. “It’s just that their income and wealth have gone down because of the economy.”

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“There’s just less wealth to give,” he added.

While donor-advised funds are a popular option, older investors may also want to consider so-called qualified charitable distributions, or QCDs.

These are direct gifts from an IRA to a qualifying charity. If you’re 70½ or older, you can donate up to $100,000 a year, and it can count as a minimum benefit requirement once you turn 72.

“There are relatively few circumstances where that wouldn’t be the first source of giving if you’re over 70,” Foster said.

While QCDs don’t provide a charitable deduction, the transfer doesn’t count as part of your adjusted gross income, which can lead to higher Medicare Part B and Part D premiums.

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