Who gives to charity, why, and how? Some Surprising Statistics Showing the People-Powered Nature of Charitable Giving.

In 2022 Americans gave $499.33 billion to charitable causes.[1] You might be surprised to learn that such giving was not attributable primarily to corporations or to wealthy private foundations, which accounted for 6% and 21% respectively, but was powered by individuals making lifetime gifts (64%) or gifts at death through their estate plan (9%). Yes, fully 73% of that nearly half-trillion-dollar figure can be traced back to the aggregate impact of individual people choosing to give.

There’s a popular impression that charitable giving is driven by the tax advantages to be gained from giving to charity. This is no doubt an important motivator. However, according to a study by The Philanthropic Initiative, surprisingly only 16% of donors cited tax savings as their primary motivation for giving.[2] More prominent motivations included supporting an important cause, desiring to give back in some way, wanting to making a positive impact on the world, encouraging generosity in younger generations by setting an example, feeling it to be an obligation of those with the means to do so, and religious motivations.

Another surprise: the most oft-cited barrier to giving was not the lack of means to do so, but uncertainty about which charity to give to or concerns that a particular charity won’t use the money well.[3] This is an area where estate planning professionals, be they estate planning attorneys, financial advisors, or CPAs, can help by connecting clients with local community foundations (which often excel at matching donors with local charities) or with philanthropic advisors (professionals who specialize in helping donors give with knowledge and confidence).

In terms of how this individual-powered giving is being accomplished, there’s been a remarkable rise in the popularity of the donor-advised fund (DAF). DAFs are kind of like a checking account for charitable giving. The DAF account holds donated assets and distributes to qualified charities according to the wishes of the account owner (the donor). Contributions may qualify for tax benefits in the year of the contribution but disbursements to charity can be made in future years according to the wishes of the donor. Donations to a DAF are irrevocable and all funds must eventually be distributed to qualifying charities. In the last ten years there has been a 582% increase in the number of DAF accounts, a 525% increase in the amount of billions of dollars held in DAF accounts, and a 437% increase in the total grants made from DAF accounts.[4] In terms of funding DAFs or just giving directly to charity, qualified charitable distributions (QCDs) from retirement accounts (often in the form of routing annual required minimum distributions (RMDs) directly to charity) or giving appreciated assets (which provides both income tax and capital gains tax savings) remain popular methods. Charitable remainder trusts and charitable lead trusts (both tools for making charitable gifts while also retaining some benefits, such as income streams, for the donor or donor’s family) are also increasingly popular methods of incorporating charitable giving into personal estate planning.

It turns out that charitable giving is powered in large part by individuals giving what they feel they can, doing so for a host of reasons unique to each donor that go beyond tax savings, and taking advantage of newer forms of giving that now exist as options alongside the traditional cash gift. So, if you’ve been feeling a pull to be more charitable, or are curious about making charitable giving a component of your estate plan, don’t hesitate to bring this up next time you meet with an estate planning professional.

[1] According to Giving USA’s Annual Report on Philanthropy for the Year 2022.

[2] According to The Philanthropic Initiative’s 2018 TPI/U.S. Trust Study of the Philanthropic Conversation.

[3] Id.

[4] According to The National Philanthropic Trust’s The 2022 DAF Report.