Fidelity Charitable, the nation’s largest grantmaker, distributed a record-setting $11.8 billion to nonprofits in 2023, up more than 5% from the previous year at a time when generally donations are dropping.
The grant total shows how quickly use of the donor-advised fund — an investment account that allows donations to be distributed over time — is growing. Fidelity Charitable said distributions to nonprofits in 2023 were four times what they were 10 years ago.
“I think 2023 was a pretty amazing year,” Fidelity Charitable President Jacob Pruitt told The Associated Press. “When you think about the volatility, the market inflation, we still did a phenomenal job in regards to grantmaking. And that’s our big measure — dollars going into the sector.”
However, the increasing popularity of DAFs has many measuring the funds’ effectiveness at funneling money to charities. Though donors receive an immediate tax deduction when they put money in a DAF, there is no deadline for them to then contribute that money to a nonprofit.
Public comment on new regulations proposed by the Internal Revenue Service for DAFs will end on Thursday. If approved, the IRS will impose a 20% excise tax on donations that provide a significant benefit to the donor.
Congress is also looking into whether the IRS needs to collect more information about donations made to nonprofits engaging in political activities. Donors can use their DAFs to give anonymously since they already received their tax deduction when they deposited the money in the DAF initially.
According to Fidelity Charitable, donors attached their names or the name of their DAF to 96% of the grants made in 2023.
“We feel we have a really solid platform,” Pruitt said. “We support regulations that focus on grantmaking and making sure that these dollars flow out of the platform.”
Fidelity Charitable said the average grant in 2023 was $4,625, with the average DAF handing out 11.8 grants in the year.
Doctors Without Borders USA and St. Jude Children’s Research Hospital were the most popular charities again, as they were in 2022. Fidelity Charitable said nearly 80% of grants in 2023 went to nonprofits donors had previously supported.
But Pruitt said that as donors become more comfortable using the DAF platform, they begin to give to more nontraditional nonprofits that they find on their own. “Our list of grantees is starting to look a little different year over…