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If you’re looking for some of the nation’s most charitable donors, turn toward Beantown.
Residents of the Boston-Cambridge-Quincy metro area were among the top three most generous cities based on gifts made to charities centered on the arts, education, the environment, health and human services, according to 2018 data from Fidelity Charitable.
The firm, a provider of donor-advised funds — tax-advantaged accounts for charitable giving — studied account holders’ giving patterns last year.
Fidelity Charitable identified eight major categories of giving: arts and culture, education, environment and animals, health, human services, international affairs, religion and society benefit.
It then ranked 30 metro areas across the country, based on the number of Fidelity donor-advised funds that made grants in 2018.
Donor-advised funds are accounts that individuals can open at a brokerage firm or a large foundation and make gifts of cash and other assets.
The fund isn’t required to distribute grants to the charity immediately, but the donor receives an income tax deduction for the year in which he or she makes the gift.
Assets that remain in the account grow free of taxes.
“Those who have donor-advised funds are thoughtful in planning their giving,” said Amy Pirozzolo, head of donor engagement at Fidelity Charitable.
“They tend to be more responsive when there is a disaster or there’s something they feel strongly about in the news, and they make grants to support those issues,” she said.
Most popular charities
A U.S. Coast Guard member carries a box of free groceries during a food giveaway on in Novato, California.
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Donors were partial to charities around human services, the most popular cause overall.
In all, 56% of Fidelity Charitable donor-advised funds made grants to food banks, homeless shelters and youth programs.
Residents residing in Cleveland made the most grants to human services causes, followed by the Boston metro area. The Bridgeport-Stamford-Norwalk metro area in Connecticut rounded out the top three.
“We think a lot of this giving is due to disasters, including Hurricane Florence and wildfires in California,” Pirozzolo said.
The educational sector, another popular area for giving, received grants from 54% of the firm’s donor advised funds.
Giving in this category was dominated by the northeast. Connecticut’s Bridgeport metro area took top honors, while Boston and the New York metro area rounded out the top three.
The Midwest and southern regions of the U.S. gave generously to religious causes. In all, 52% of Fidelity Charitable’s donor-advised funds made grants to these organizations, including churches, synagogues and temples.
Account holders in St. Louis made the most grants to this sector, followed by Houston and Indianapolis.
Make your giving tax efficient
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Get the most tax-savings for your donated dollars by planning your donations.
Rather than making a gift in cash, consider donating your highly appreciated stocks. This way, you get an income tax deduction based on the fair market value.
That’s a better option than selling the appreciated stock, paying a capital gains tax and donating the remainder to your favorite cause.
“This is where you can make the most impact on a charity,” said Pirozzolo. “If you give an appreciated asset, you can eliminate capital gains and give more to charity.”
Be aware that you can only take a deduction for charitable giving on your federal return if you itemize. Now that the standard deduction has been roughly doubled, fewer taxpayers will itemize going forward.
You can get around this by bunching your charitable donations — you lump in at least two years’ of gifts — to get a charitable deduction that’s large enough to help you get over the threshold and itemize on your return.
In this fashion, you’ll itemize your deductions in one year and take the standard deduction the following year.