World's wealthy amass $121 billion in tax-sheltered accounts
The Daily Caller’s Christopher Bedford gives his take on the Democratic presidential race.
Contributions to tax-sheltered, donor-advised funds spiked last year, with a record amount of money given by the wealthy, according to a new report.
Last year alone, the wealthy gave an estimated $37.12 billion to donor-advised funds — a 20.1 percent increase from 2017, according to the 13th annual report from the National Philanthropic Trust, published on Tuesday. That means the amount of charitable assets in donor-advised funds grew to $121.42 billion last year, an 8.3 percent increase from 2017.
Business success, finance, banking, accounting and making money concept: printing 100 US dollar USD money paper cash banknotes on print machine in typography
A donor-advised fund, or DAF, allows individuals to make a charitable contribution, receive an immediate tax deduction and then recommend grants from the fund over time. Money in a DAF can be invested before it’s granted out -- but the growth on that money won’t be taxed. Plus, DAFs can reduce tax burdens if an individual receives a sudden windfall of money, like an inheritance, by allowing individuals to take an immediate tax deduction when they make a charitable contribution.
WORLD'S WEALTHY BRACING FOR HUGE SELL-OFF IN 2020, UBS SAYS
The sudden rush into DAFs is a result of the tax overhaul passed by Republicans two years ago, said Eileen Heisman, president and CEO of National Philanthropic Trust, because taxpayers were trying to exceed the standard deduction amount.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“Contributions to donor-advised funds outpaced grants for the first time in four years, which may indicate donors choosing to ‘bunch’ their giving — essentially pre-funding several years of charitable giving to make their philanthropy more tax effective,” Heisman said in a statement.
The number of DAF accounts also hit a record, rising more than 55 percent to 728,563 in 2018, up from 369,331 in 2017.
Still, Heisman told Bloomberg News that one possible issue that could arise out of an influx of DAFs is that while the overall amount given to charity is rising, studies show that about 20 million fewer households gave money in 2016, compared to 2000.
“Higher-net worth individuals are giving a larger percentage of dollars, and that’s not good for civil society or democracy,” she said. “There are still people out there after the recovery from the crash who are not accumulating wealth and don’t have extra money to give away. So there are some trend lines in giving that aren’t as positive as they could be, and that’s a silent part of this report.”