A prominent organization in the US philanthropy field talks about how recent political events and the calendar are putting would-be donors under pressure to grapple quickly with available options.

With a new US presidential administration and members of Congress gearing up to take up the reins of office, there is even more understandable year-end pressure on high net worth individuals to think about  tax-smart, high-impact charitable giving options such as donor advised funds as new tax rates loom over the horizon.

That is the view of Karla D'Alleva Valas, who is managing director of the Complex Asset Group for Fidelity Charitable. 

While the fine print of tax plans of the upcoming Donald Trump administration and the Republican-controlled Congress will be subject to the usual political theatrics, the fact that tax rates on the wealthy might be cut, or at least won’t go up as was slated under Secretary Hillary Clinton’s rival platform, puts donors in a bind. On the one hand, they might think that it makes sense to wait for the newer tax code to emerge. On the other hand, with year-end tax accounting deadlines so near, some are urgently considering their options so as not to miss out on making use of tax deductions.

“At no time such as this has year-end planning for philanthropy been more appropriate and necessary,” Valas told Family Wealth Report in a telephone interview. 

One of the benefits of the donor advised fund model, she said, was its flexibility in giving donors the choice of exactly when to pull the trigger in deciding which non-profits they should send money from the DAF’s funds. And with uncertainties being what they are, that sort of flexibility is a godsend, she said.

A particular benefit of DAFs is the entity’s willingness to consider and accept  a variety of asset types, including, illiquid or privately-held investments, ones that go beyond the staples of cash and publicly-listed stocks, she said.

As reported last week, grants via Fidelity Charitable’s DAFs almost doubled over the 10 years to the end of 2015; those of $1 million or more have risen significantly. Fidelity Charitable’s Giving Report sheds light on the grant-making conduct of 132,000 donors who use what the charity calls Giving Accounts to support various causes. In 2015, these donors recommended $3.1 billion in grants to a total of more than 106,000 groups worldwide. (Fidelity Charitable was launched by a group of trustees in 1991.) The average number of grants per Giving Account each year has nearly doubled in the past 10 years to 9.2 grants per Giving Account; grants of $1 million or more increased 27 percent over the previous year, Fidelity Charitable said. Its report is based on an analysis of both the activity of its 80,000-plus Giving Accounts and survey data comparing Fidelity Charitable donors to charitable donors overall. 

FWR asked Valas about whether DAFs give holders too much freedom to hold off from choosing to make donations. She responded: “Our donors are active grant-makers and indications are that they are granting more dollars to charity, are granting to a wider array of charities than they used to with direct donations, and are partnering more intentionally with their chosen causes to create additional impact. “We don’t find there is any delay in grant-making,” she added. 

She was also asked about the pros and cons of DAFs as contrasted with private foundations. She said these structures are often complementary, citing the example of how, for example, the children of parents who established a foundation to create a family legacy chose to fund individual DAFs to suit their personal philanthropic goals. Ultra-high net worth philanthropists and their advisors are constantly evaluating all of the resources available to them to make strategic decisions which coordinate with a holistic wealth management plan to achieve their charitable mission, she added.