July 22, 2010 — An expected increase in income taxes will likely spur greater charitable giving, to offset those taxes, over the next 12 to 18 months, according to new research findings released yesterday by the Fidelity Charitable Gift Fund.

The 2010 Fidelity Charitable Gift Fund Advice & Giving survey, which gathered responses from more than 500 financial advisors, found that:

• 87% of financial advisors expect income taxes to increase for most of their clients in the next 12 to 18 months.
• 26% predict their clients will increase charitable giving in order to offset tax hikes.
• 48% of advisors expect their clients to maintain their level of giving, despite ongoing market uncertainty and an overall decline in U.S. charitable giving in 2009.

When asked which giving vehicle they expect to see increase in use over the next five years, twice the number of advisors cited donor-advised funds (39%) compared to private foundations (20%).

The ability to help simplify giving was the top reason why advisors thought donor-advised funds' usage would increase (75%). This was followed by ease of administration (74%) and favorable tax treatment (58%).

Advisors who are knowledgeable about donor-advised funds said they are suitable for clients who seek an immediate tax deduction but prefer time to decide where to disburse grants (65%). They also said that donor-advised funds are good for those who have reached a certain asset level (60%) and those who want to keep and access all of their charitable records in one place (42%).

More than three quarters (78%) of advisors consider themselves active charitable givers and 68% of advisors said that personal charitable giving habits influence how comfortable they are giving charitable planning advice to clients.

Advisors surveyed reveal that they contribute, on average, $13,000 per year to charitable causes — primarily through checkbook giving vs. other giving vehicles such as community foundations, private foundations or donor-advised funds.

Forty percent of advisors who indicated that they are not proactive in giving advice on charitable planning said they would be motivated to do so with "a better understanding of how to introduce the topic to clients."

Since its inception in1991, the Fidelity Charitable Gift Fund, managed by Fidelity Investments, has helped more than 56,000 donors recommend more than $10 billion in grants to more than 136,000 nonprofit organizations through its donor-advised fund program.