Charitable giving on the upswing after falling in 2009

Americans may be ready to give again. Buoyed by advancing equity markets and some economic optimism, many people are boosting their donations to charities and philanthropic funds after cutting back on giving last year, according to professionals who follow the nation's giving patterns. “We're seeing a huge amount of activity,” said Eileen Heisman, chief executive of the National Philanthropic Trust, a donor-advised-fund organization. The trust, which manages $800 million in charitable assets, is on pace to have its best year ever, she said. “By the end of the year, we'll have a better sense of how far it has come up,” Ms. Heisman said. The Charles Schwab Corp. reported that contributions to its donor-advised fund jumped during the first nine months of the year to $610 million, a 274% increase from a year earlier, according to the firm. The Schwab fund has more than $4.7 billion in assets and has facilitated more than $2 billion in grants. The National Philanthropic Trust has seen a relationship between giving and stock market performance. Each time the equity markets have rallied, beginning at the end of 2009, the fund has seen a spike in donations a few days later, Ms. Heisman said. As the economy improves, people will feel even more secure and “and they will be giving in a more sustained way,” she said. Charitable giving last year fell to $303.75 billion, down 3% from 2008, according to the Giving USA Foundation. It is estimated that nearly 90% of that total, $266 billion, came from individual bequests and family foundations. Donations to arts and cultural organizations declined last year, while giving to groups focused on human services, health, environment and animals increased. Religious donations remained consistent at about a third of all gifts, according to the research organization. Giving USA doesn't have figures for 2010 yet, but its leaders said that they have heard that wallets are opening, including two high-profile examples. In September, Facebook Inc. founder Mark Zuckerberg donated $100 million to the Newark, N.J., school system, and last month, investor Henry Kravis pledged $100 million to Columbia Business School. “People are starting to feel better and are willing to start making gifts again,” said Edith Falk, chairman of the Giving USA Foundation. “But some people are still a little nervous about whether we really are coming out of the hard times.”

STILL SKITTISH

Some people are still skittish about making multiyear pledges, and fundraisers often heard that they should “try back after the [midterm] elections,” she said. Some thought that a Republican takeover in Congress would boost the economy and equity markets. There was a surge in giving late last year when equity markets started heading up, Ms. Falk said. Based on historical patterns, she expects that it will be another year before giving returns to pre-recession levels. “This recession was longer and deeper, so hopefully it won't take longer than it has in the past,” Ms. Falk said. Some financial advisers said that they have seen increased interest from clients in giving. “We are seeing more family foundations being set up,” said Mark Petersen, an adviser with Carson Wealth Management Group, which manages $2.6 billion in client assets. “We have added a section that we cover in meetings with clients specifically focused on charitable giving and how they can do so in a tax-efficient manner.” Many clients set up family foundations when they sell a business, Mr. Petersen said. Any assets that are transferred to a private family foundation can be sold by that foundation without paying capital gains taxes. A client would take the charitable deduction for the year of the sale or for any high-income year but wouldn't have to funnel the whole donation to charities in that year. Just 5% of the foundation's assets must be given out each year, Mr. Petersen said. Carson Wealth Management Group is the top wealth manager for LPL Financial Corp. Financial adviser John Waldron of Waldron Wealth Management said that his clients are starting to look again at adding charitable donations as part of their overall estate planning. Clients cut back on giving to charities by about 20% during the recession, especially if they were in industries such as real estate, travel or others that were most hurt by the economic downturn, said Mr. Waldron, whose firm manages about $2.3 billion in assets. In most cases, additional funds are being given to the same causes that clients historically have supported, Mr. Waldron said. Although estate taxes are one reason that clients consider charitable giving, another has to do with how some clients feel about the direction of the nation's social policies, such as health care, he said. “They are saying that they would rather give it to a foundation and control how and where their wealth is spent,” Mr. Waldron said.