Why Donors in Charitable Giving Vehicles Should Consider Asset Allocation Investments

Charitably inclined Americans are increasingly choosing charitable vehicles, like donor-advised funds, to facilitate their giving, where their contributions are invested with the potential to grow. Over time, donors could have a bigger impact on the causes they support.

Charitable objectives in these vehicles can be approached like other financial goals, by considering the timeframe for giving and the donor's investment risk tolerance.

Asset allocation investments are a simple solution that offers the potential for reduced volatility through diversification, with the added benefit of professional money management to help meet charitable goals.

What are asset allocation investments?

Asset allocation investments are target-risk investments, offering diversification among multiple asset classes in a single investment, with the added benefits of professional management and experienced security selection. Asset allocation investments have a mix of stocks, bonds, and short-term instruments that range from a more conservative and lower equity allocation mix to a more aggressive and higher equity allocation mix.

Actively managed to meet a variety of philanthropic goals

Asset allocation investments provide a range of actively managed investment options to help donors reach their philanthropic goals. Active management ensures that the investments within charitable vehicles, like donor-advised funds, align with donors' charitable intentions, freeing up their time to concentrate on most effectively supporting their favorite causes.

All donors need to do is select the asset allocation investment with the total equity percentage that most closely matches their giving time frame — experienced money managers do the rest, as they continually monitor and rebalance the investments to help keep them on track.

Benefits of asset allocation investments

  • Diversification. In a single investment, a charitable vehicle can have exposure to multiple asset classes, including domestic and international stocks across varying styles and market capitalization ranges, investment-grade and high-yield bonds, and short-term instruments.
  • Confidence. Donors can be assured that the asset allocation investment will be professionally managed to remain consistent with their charitable giving objectives.
  • Ease. The all-in-one approach is easier than monitoring several different investments within a charitable vehicle.

Learn more about asset allocation investing in this video on Fidelity.com: A Conversation about the Asset Manager Funds with Geoff Stein, Portfolio Manager


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