Podcasts Business Retirement Starts Today Fidelity & Schwab Donors Set Record for Charitable Giving in Response to Pandemic, Ep #187

Fidelity & Schwab Donors Set Record for Charitable Giving in Response to Pandemic, Ep #187

Published: April 12, 2021, 8 a.m.

Despite the economic downturn, 2020 turned out to be a fantastic year for charitable giving. In this episode, we\u2019ll look at how people chose to give and you\u2019ll learn about the efficiency of giving through donor-advised funds (DAFs).\xa0

In the listener questions segment, you\u2019ll learn how to survive a bear market in retirement. We\u2019ll investigate the length of the average bear market and see how you can prepare for the worst in your retirement years.\xa0

Outline of This Episode
  • [1:42] 2020 was a banner year for giving
  • [4:48] Planning ahead can help alleviate a hefty tax bill
  • [10:49] What is the average length of recovery from a bear market?
  • [17:04] Look into Guyten\u2019s Guardrails
Shwab and Fidelity both showed an increase in giving

You would think that with the economic downturn of the last year that people would tighten their bootstraps and cease giving to charities, but it turned out that the opposite was true. The two largest brokerage firms, Schwab and Fidelity, recorded increases in charitable donations.\xa0

Donations were made in response to the Covid pandemic and the social justice protests that marked the year. The biggest recipients of these charitable gifts were organizations that provide food and other necessities

Donor-advised funds are an important vehicle for charitable giving

Fidelity Charitable and Schwab Charitable both use donor-advised funds as a vehicle for charitable giving. Donor-advised funds (DAFs) have become popular since they are simple and make for an easy way to give strategically. These charitable investment accounts allow a donor to make a charitable contribution, receive a tax deduction, and then distribute the money over time. Have you thought of changing the way that you make charitable contributions?

What are the benefits of using DAFs?

DAFs have become more popular in recent years due to changes in tax laws. The new standard deduction for charitable giving increased to $24,800 for a married couple. By creating a DAF, donors can contribute a lump sum every few years and then administer the funds to the charities they choose over time. Many advisors recommend donor-advised funds as a receptacle for their clients to strategically deduct charitable contributions. Listen in to hear a real-world example of how a DAF can be used.\xa0

Planning ahead can create a tax deduction

We must all pay our taxes, but we never want to overpay -- no one wants to leave the taxman a tip. If you are charitably minded, a donor-advised fund is an excellent way to implement a multi-year tax strategy and take advantage of the standard deduction. Think about how lump sum giving every few years could change your tax situation. It pays to plan your taxes ahead in retirement.

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