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Fidelity Charitable donors decide to establish donor-advised funds for a variety of reasons — to simplify their giving, for tax advantages, or to support their legacy planning, to name just a few. One of the lesser known benefits of a donor-advised fund is the ability to give your charitable dollars the opportunity for tax-free growth. Although some donors may grant assets out to their favorite charities right away, many donors maintain their Giving Account for some time as they decide which charities to support.
To give the assets in your Giving Account the opportunity for growth, they have to “be in it to win it.” In other words, charitable dollars need to be invested to participate in any market gains. Leaving charitable dollars on the sideline in cash has historically not been a good way to achieve growth. A diversified investment approach, with regular rebalancing, can help manage risk in your Giving Account and should align with your philanthropic goals.
Inflation means that, over time, each dollar is worth less. For example, what you could buy with $1.00 in 2000 would require $1.47 in 20181. Investing charitable assets may help them maintain their value over time, on an inflation-adjusted basis, continuing to provide the intended support to your favorite charities
Fidelity Charitable’s Sustainable and Impact Investing pools pursue social and environmental impact, while also generating financial returns (i.e. a “double bottom-line” benefit). These investment strategies provide an opportunity to let charitable assets do good before they ultimately are granted to an end charity.
Like with any investment, invested assets in your Giving Account will depend on market performance. That’s why Fidelity Charitable offers more than 20 investment pools to our donors. These investment options range from asset allocation pools, which offer diversification through an all-in-one, risk-based approach, to investments that focus jointly on social good and financial returns, along with passively- and actively-managed broad market investments. Make sure your Giving Account is appropriately invested today.