Give with greater impact

Gifts to your donor-advised fund can now be invested in actively managed investment portfolios that target competitive financial returns and seek positive environmental and social effects

Donor-advised funds (DAFs) offer a convenient, flexible, tax-advantaged way of giving that offers your irrevocable contributions, because they are invested, the opportunity to potentially grow over time. These benefits help make DAFs one of the fastest-growing philanthropic vehicles, with contributions increasing an average of 24% annually over the past decade.¹ They can be even more appealing when you know that your contributions can be invested in sustainable investing portfolios. “Sustainable investments offer donors the potential to magnify the impact of their charitable giving — aligning their values and charitable priorities to both their grant and asset management strategies,” explains Donald J. Greene, national donor-advised fund executive, Bank of America Private Bank.

To that end, seven portfolios with sustainable investment strategies are available through the Bank of America Charitable Gift Fund. “Our sustainable portfolios offer donors the potential to stay true to their values regardless of the investment objective they’ve selected to reflect their charitable giving strategy with the Bank of America Charitable Gift Fund,” says Greene. Donors can make gifts directly through the Charitable Gift Fund’s online portal to any of the more than 1.8 million IRS-recognized charities in the U.S.

Graphic providing reasons investors should consider putting donor-advised fund (DAF) contributions in sustainable investing portfolios. See link below for complete description.

4 reasons to consider putting DAF contributions in sustainable investing portfolios.

Reason 1: Popularity

The number of individual DAF accounts rose 2.9 percent from 2021 to 2022. The annual growth rate for the number of donor-advised funds from 2018 to 2022 is 22.6 percent.1

In 2018 there were 861,328 donor-advised funds and in 2022 there were 1,948,545 donor-advised funds.

Reason 2: Performance

In recent years, sustainable U.S. large-blend funds have been outperforming traditional large-blend stock funds.

74% of sustainable funds as reported by Morningstar rank in the top two quartiles in their respective category in terms of performance over a five-year period.2

Reason 3: Adoption

One out of two investment dollars now goes toward ESG/sustainable funds.3

In 2018, $5.4 billion in investment dollars went into ESG/sustainable funds.

In 2019, $21.4 billion in investment dollars went into ESG/sustainable funds.

In 2020, $51.1 billion in investment dollars went into ESG/sustainable funds.

In 2021, $71.7 billion in investment dollars went into ESG/sustainable funds.

Reason 4: Tax Efficiency

DAFs have higher tax deduction thresholds for cash donations than private foundations.

For donor-advised funds, the deduction limit for cash contributions is 60% of adjusted gross income (AGI) and the deduction limit for securities and appreciable assets is 30% of AGI.4

For private foundations, the deduction limit for cash contributions is 30% of AGI and the deduction limit for securities and appreciable assets is 20% of AGI.5

Ask your advisor for more information on how a donor-advised fund works, and whether the Bank of America Charitable Gift Fund might help you meet your giving goals.

¹ National Philanthropic Trust, “2023 Donor-Advised Fund Report,” November 2023.

² Bloomberg, 3-year returns for the MSCI World ESG Leaders Index were 8.51% annually, while the MSCI World Index returned 7.83% annually (12/31/2020-12/31/2023). 5-year returns for the MSCI World ESG Leaders Index were 13.84% annually, while the MSCI World Index returned 13.41% annually (12/31/2018-12/31/2023). 7-year returns for the MSCI World ESG Leaders Index were 11.63% annually, while the MSCI World Index returned 11.33% annually (12/31/2016-12/31/2023). 10-year returns for the MSCI World ESG Leaders Index were 9.37% annually, while the MSCI World Index returned 9.22% annually (12/31/2016-12/31/2023).

³ BofA Global Research. December 2023 .

⁴ American Endowment Foundation, “5 Primary Tax Benefits to Donors” May 2024 (latest data available).

⁵ Hurwit & Associates, “Starting a Private Foundation” as of June 2021 (latest data available).

Important Disclosures

Investing involves risk. There is always the potential of losing money when you invest in securities. Past performance is no guarantee of future results.

Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.

Donor-advised fund management is provided by Bank of America Private Bank, a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). Trust, fiduciary, and investment management services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A. and its agents. Brokerage services may be performed by wholly owned brokerage affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”). Merrill is a registered broker-dealer, a registered investment adviser and Member SIPC.

Sustainable and Impact Investing and/or Environmental, Social and Governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. Further, ESG strategies may rely on certain values-based criteria to eliminate exposures found in similar strategies or broad market benchmarks, which could also result in relative investment performance deviating.