By GLENN GAMBOA
AP Business Writer
Fidelity Charitable, the nation’s largest grantmaker, announced Tuesday that 2022 was another record-setting year, with $11.2 billion in grants awarded by its donor-advised fund holders, up 9% over 2021.
What makes the new record even more notable was that the donations came during a year of high inflation and recession worries. In fact, 2022 was a rare year when grants flowing out of Fidelity Charitable’s donor-advised funds outpaced the investments going into them.
“Despite the S&P being down 19% and an uncertain economy, grants from Fidelity Charitable donors increased 9% while contributions were down in line with the S&P over the last year,” said Jacob Pruitt, President, Fidelity Charitable. “This illustrates the power of donor-advised funds to help sustain the philanthropic sector even during periods of uncertainty.”
According to Fidelity Charitable’s 2023 Giving Report, its donor-advised fund holders awarded 2.2 million grants to 189,000 charities in 2022. A donor-advised fund is a sort of charitable investment account that allows people to immediately receive tax breaks for what they contribute, even if it takes years for those contributions to be donated to a nonprofit.
Critics of donor-advised funds complain that grants can be delayed indefinitely. Congress is currently considering legislation to change that, including the bipartisan Accelerating Charitable Efforts Act that would require grants to be made from those accounts within 15 years.
The record-breaking numbers from 2022 show that while donors were concerned about the impact of inflation and the economy, Pruitt said they decided to “put that concern into action.” They are also a sign that donor-advised funds can be used as a “ ready reserve ” for increased donations when needed, he added.
William Foster, managing partner at the nonprofit adviser The Bridgespan Group, said that though 2022 data is not yet finalized, his research shows that donors are increasingly motivated to give and that they are finding new ways to do it. Foster said the trend in collaborative giving continued last year, where individual donors team up or work through an intermediary to provide ambitious donations to tackle big issues.
“There’s always a fear that there’s one more question that can be asked or one other cause or organization that might be better around the corner,” Foster said. “The truth is that you only become a better philanthropist by being active today. Typically, acting today does not come at the opportunity cost of what you might do in the future. If anything, it opens doors to more opportunity.”
According to Fidelity Charitable’s report, the three most popular grantees in 2022 were Doctors Without Borders USA, St. Jude Children’s Research Hospital and World Central Kitchen, which moved from No. 26 in 2021 to No. 3 last year.
In terms of charitable sectors, donations to most sectors remained the same in 2022, with grants to human services and arts and culture each dipping by 1% and grants to religion and international affairs climbing by 1%.
Associated Press coverage of philanthropy and nonprofits receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.