Nearly half of advisors report clients adjusted their charitable giving strategy in response to tax reform

BOSTON, MA, June 12, 2019 – The Tax Cuts and Jobs Act signed in December 2017 overhauled the American tax code. It also altered how advisors are thinking of charitable giving and bringing philanthropy into conversations with clients. Fidelity Charitable^®, an independent public charity and one of the nation’s largest grantmakers, released today a survey revealing how post-tax reform, advisors are increasingly embracing and promoting charitable strategies to their clients.

Nearly half of advisors report that, following more than 10 years of a bull market and a major overhaul of the tax system, many or most of their clients adjusted their charitable giving strategy in response to tax reform. Specifically:

• 47% of advisors say that many or most clients increased giving overall due to the loss of other deductions
• 46% say they established a donor-advised fund
• 46% say they donated appreciated securities to maximize deductions
• 44% say they employed a bunching strategy to maximize charitable deductions

“Giving to charity is a decision that clients make from the heart, but most would be delighted to be able to give more if they had guidance on how to give more strategically. Tax reform raised awareness on the part of advisors of the need to help clients be more thoughtful about the timing, assets and methods used for giving as a part of a holistic financial plan,” said Karla Valas, senior vice president, fundraising and distribution at Fidelity Charitable.

In the wake of tax reform, advisors have adapted their recommendations and increased their conversations with clients about charitable planning. In fact, more than a third of advisors recommended that the majority of their clients adjust their charitable giving strategy post-tax reform.

Additionally, advisors seem to have recognized that charitable giving has become a more prominent part of providing holistic financial and wealth management services and are having more philanthropic conversations with their clients. In fact, since 2015, the number of clients with whom advisors discuss giving has risen significantly from 46% to 58%. At the same time, both of these points suggest that advisors may not be discussing charitable giving broadly enough with their client base and that additional opportunities exist to expand their charitable conversations to help clients maximize their giving and minimize their tax burdens.

Advisors also increasingly understand that charitable giving vehicles are not only for ultra-high net worth clients but are important financial tools from which a wider array of clients could benefit. Today, advisors believe that more than half of their clients could benefit from a charitable giving vehicle, like a donor-advised fund or private foundation. Four years ago, that number was 41%.

Though many advisors seem to be comfortable discussing a variety of charitable topics with clients, most want to learn more about philanthropic planning and are seeking advanced education so they can engage even more deeply. Fidelity Charitable has seen this trend through its complimentary Charitable Planning Practice Management program, which provides advisors with the educational resources and training needed to incorporate charitable planning and sophisticated philanthropic strategies into their practice.

“Advisors who are knowledgeable and confident about charitable planning can help their clients make the most of their generosity—in ways that can benefit them and the charities they care about,” concluded Valas.

View the full data analysis

Methodology

W5, an independent research firm, conducted a research study on behalf of Fidelity Charitable to profile financial advisors and their awareness of donor-advised funds and charitable giving strategies. 250 professional advisors in the U.S. were surveyed in 2019, including financial advisors, certified public accountants (CPAs), and attorneys. This data analysis focuses on data collected from 175 financial advisors whose assets under management have a total market value of $25 million or more.