How Investment Firms Are Changing Philanthropy
In 1991, as the United States was emerging from a recession, Edward C. Johnson III, the chairman of Fidelity Investments, introduced what at the time was an unorthodox possibility: What if his company could facilitate charitable donations for its clients?
The firm could help people get a tax benefit while making it easier for them to give to charities.
By the end of the year, the company had obtained public-charity status for an organization called the Fidelity Charitable Gift Fund.
Clients could create an account that would hold their donations to the fund and write off the contribution on their tax returns that year. Eventually, they would have to select one or more charities and direct Fidelity to funnel the money there, but they could do that at their leisure.
Soon, Charles Schwab and the Vanguard Group had introduced similar services, which are known as donor-advised funds.
The donor-advised funds often give to charities far more than the five per cent that foundations are required to disburse.
At Fidelity, Vanguard, and Schwab, the over-all figures have recently surpassed twenty per cent.
Source: How Investment Firms Are Changing Philanthropy – The New Yorker