Schwab Charitable is a provider of donor-advised funds (DAF), charitable funds through which donors can direct contributions. It is operated by Charles Schwab and Co. The organization is one of many donor-advised fund providers in the United States operated by large financial institutions. The organization is the sixth-largest charitable organization in the United States and among the largest grantmaking organizations in the country. Donor-advised fund providers including Schwab Charitable have drawn criticism from the political left as their recent growth has allowed for increased donor privacy.
Since Schwab Charitable’s creation, donors to Schwab Charitable have contributed to over 130,000 charities with grants totaling more than $10 billion. 1
Background
Schwab Charitable is a provider of donor-advised funds, which are charitable accounts that allow donors to establish directed giving through a large pass-through entity that is also classified as a charitable organization. Donor-advised funds are popular among many individual donors for their ease of use and their ability to give to a large number and variety of charities while only needing to make one large contribution to the donor-advised fund for tax purposes. Many financial institutions and brokerages, such as Schwab, Fidelity Investments, Bank of America, and Goldman Sachs have established charitable arms to operate donor-advised funds, which are all organized as 501(c)(3) charitable organizations. In addition to Schwab Charitable, such organizations include the Goldman Sachs Philanthropy Fund, Fidelity Charitable Gift Fund, Vanguard Charitable Endowment Program, and Bank of America Charitable Gift Fund. 1
In response to pressure from left-leaning groups, Fidelity Charitable Gift Fund, the largest fund of its kind, announced that it would begin to choose charities for donors if no funds are disbursed within three years. Schwab Charitable responded that 80% of its contributions have been fully distributed to charity within 10 years. Another criticism of the organization arises from the organizations’ collection of asset management fees as an incentive to keep donor money in the fund. Schwab noted that the amount of financial resources Charles Schwab Corporation provides to its donor-advised fund is “far greater than any fees it receives for investment management.” 1
Additional criticism of large corporate financial management donor-advised funds is the questionable nature of their fitness for ideological giving. There have been reports of donor-advised funds vetoing certain conservative organizations for being “too political.” These concerns have been further compounded by the fact that donor-advised funds ultimately have the ultimate say on whether funds will ultimately be designated according to the donor’s wishes, even in some cases fund providers may make funding decisions for a donor in the event they have not been allocating fund or if they have died without naming an heir to their fund. 0){
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