In 2021, when I became President of Fidelity Charitable®, a public charity that sponsors a donor-advised fund (DAF), the organization’s mission-to make giving simple, accessible, and effective- immediately resonated with me. Thanks to our DAF, which is like a charitable investment account that enables individuals to give more by giving in a tax-smart way, we serve as the nation’s top grant maker. We’ve worked with over 300,000 donors, supported 382,000 charities, and distributed $73 billion in donor-recommended grants.
Yet, we’re driven to do more to help people expand their impact. That means broadening the tent of philanthropy to be more inclusive. Consider the Black community. According to a report from the W.K. Kellogg Foundation and Rockefeller Philanthropy Advisors, almost two-thirds of Black families make charitable donations, worth a total of $11 billion a year. Black families have given back for generations, doing so in both formal and informal ways: church tithing, supporting Historically Black Colleges and Universities (HBCUs), and directly giving to family members. As an HBCU alumnus myself-a proud Tennessee State University graduate-I understand this practice personally, as well as the way that giving in Black communities is strongly rooted in family tradition. My orientation toward giving back-and belief in the power of each of us to lift our community-is something that I learned from my grandfather, who purchased land where a community church and school were built, a legacy that supported generations.
Despite a well-established tradition of generosity, though, many in the Black community don’t take advantage of tax- smart strategies like DAFs. This is in part, no doubt, due to the lack of trust in financial institutions with a history of inequitable lending practices and limited access to financial advice compared to their white peers. But such strategies offer tax advantages, potentially allowing donors the opportunity to make their charitable dollars go further. When you contribute to a DAF, for example, you become eligible for an immediate tax deduction. Your contribution is also invested and can potentially grow tax-free while you decide which charities to recommend grants to.
Unlocking access to tax-smart giving isn’t only a way for Black donors to support personal philanthropic legacies. Tax-smart strategies can also bolster nonprofits working in communities of color, helping to close the persistent funding gap for Black-led organizations. A study by Echoing Green and The Bridgespan Group shows that Black-led, early-stage nonprofits receive 24% less revenue than white-led nonprofits. Every extra charitable dollar made available through tax-savvy giving is another dollar available to send to Black-led organizations that need support.
My message to the Black community: Don’t wait to start giving smarter. It’s important to begin creating a philanthropic legacy now, making it part of your overall wealth-building goals, such as establishing a reserve for college expenses, saving for retirement, or planning a once-in-a-lifetime trip. Here are a few ways to get started:
- Start with your family. Develop a family charitable mission statement, volunteer together, talk with your children about causes they care about, and provide them a giving budget.
- Identify and adopt tax-smart giving methods. If you work with a financial advisor, ask about tax-smart strategies for giving. Consider opening a DAF and donating appreciated assets. By donating appreciated stock that you’ve held for a year or more, you can minimize capital gains taxes and maximize support for charities.
- Offer your time and talent. Organizations need your voice and engagement. You have much to offer, regardless of your current giving level. Your expertise and involvement can shape organizations and communities for the better.
When the Black community collectively takes advantage of strategic giving, the benefits are multifold: We prosper as individuals, as families, and as a society. I’ve experienced the joy of making giving part of my own family’s fabric. We opened a DAF and recommend grants to charities that we all care about. It’s a wonderful way to connect with my children who, in turn, make their own connections-writing personal notes to the charities.
It’s never too early to establish a philanthropic legacy. By starting now, we create more impact today and for generations to come.