Meet the new chief of Schwab Charitable, the philanthropic arm that gave out $3.7 billion last year
Sam Kang is a finance professional who spent 20 years at TD Ameritrade during the day while having secret conversations about philanthropy every night.
“Philanthropy has always been important to my family because my wife has worked in nonprofits her entire career and was one of our normal dinner conversations,” said Kang.
In 2018, he joined Schwab Charitable – the donor-advised philanthropic arm of Charles Schwab Corp., which has donated $ 17 billion since its inception in 1999. Including a record of $ 3.7 billion last year.
Now, three years later, 48-year-old Kang runs the San Francisco-based nonprofit from its base in Westlake, which Schwab named its corporate headquarters last year. He replaced Kim Laughton, who was retiring after nearly a decade at the helm.
Schwab Charitable is one of those funds that are benefiting from an increasingly popular method of directing charitable donations to their favorite charities. Donor Advised Funds are charitable savings accounts that provide tax breaks to donors who can forward grants to nonprofits if they choose. Schwab Charitable holds the money until it is spent, leading prominent philanthropists like Houston billionaire John Arnold to refer to it as “wealth warehousing”.
Prior to becoming president on July 1, Kang led the service, operations and technology teams at Schwab Charitable. Kang said he was focused on increasing efficiency as speed is most important when it comes to bringing money to charities, especially during a pandemic. He said 79% of the grants are now automated.
And despite the COVID-19 pandemic that brought with it difficult economic times, 2020 was a record year for donations. Schwab Charitable grants rose from $ 550 million in 2012 to $ 3.7 billion in 2020. The nonprofit saw an increase in donations to food banks and health and social services that were essential during the pandemic .
“As soon as March came in last year, there was a huge influx of permits, and we’re still seeing that this year,” said Kang. “Donors understood that charities were in a situation where they needed to support voters in the community.”
This reflected the broader trend in the United States, where charitable giving reached a record $ 471 billion in 2020, up 5.1% year over year, according to the Giving USA Foundation. The donors realized the dire situation that charities were in.
Schwab Charitable has had the largest increase in staff in Texas recently, but is also strong in Colorado and California.
In Texas, over $ 100 million was donated to 5,600 organizations this year. Most donors are happy to give locally, with 90% of the grants remaining in the donor community.
“We’re seeing strong tailwinds for philanthropy as a whole,” said Kang.
Charles Schwab also has a foundation that donated $ 12.2 million to nonprofits in 2020. Last year, company founder Charles Schwab and his wife Helen donated $ 65 million to the San Francisco poverty reduction organization Tipping Point Community The 25 Biggest Donations of 2020.
But the purpose of Schwab Charitable is to bring charitable planning to the masses. There is no minimum account size. The average is $ 27,000.
According to the National Philanthropic Trust’s 14th Annual Report, the number of donor-advised accounts in the U.S. was 873,228 in 2019, up 19.4% from 2018. The value of accounts recommended by donors averaged $ 162,556. Donations from these accounts reached $ 8.32 billion last year, up 29.8% compared to 2019 when people responded to the COVID-19 pandemic.
“There has been a huge increase in charitable giving, though no one would believe it,” said Tim McDonald, a senior financial advisor at Charles Schwab who works with Schwab Charitable. He has been with the company for around 11 years.
McDonald sits down with customers to find out their goals. Charitable giving are often part of clients’ goals, but they don’t have a strategy, he said.
“The barriers to getting into and using a donor-advised fund are extremely low,” he said.
As a consultant, McDonald deals with retirement, taxation, estate planning, asset protection and charity gifting. There is no overarching rule for how much someone should donate to charity, he said.
Keeping up with tax laws is one of the most valuable things Schwab consultants do for those who want to maximize their donations, he said.
“Nobody can keep up with the tax code,” he said. “We let people know what the consequences of giving away money, good or bad, and what the best strategy is.”
For example, if a church customer wants to donate $ 10,000 annually over five years to build a new organ, McDonald may ask them to use a donor-recommended fund to withdraw $ 50,000 this year to help build a new organ Get $ 12,000 deduction. Then they can still give the church $ 10,000 a year while receiving the largest tax deduction.
“The church wins and the customer wins,” he said.
He has also advised clients on topics he finds worthwhile – how to give away a $ 5 million building or how to ensure that taxpayers’ money from a company’s IPO goes to charity.
“What’s better than talking to people about how to help others?” He said.
Since it was founded in 1999, Schwab Charitable has donated to 183,000 charities nationwide.
Critics of donor-recommended funds say they are a vehicle for investors to park their money in an account for instant tax deductions, but can then wait years to give the money away. Kang said his top priority is figuring out how to get money to charities faster.
He plans to do this by focusing his attention on new products and services and overseeing investment and risk management programs.
“We continue to look for new ways to help donors increase donation power and increase donations,” he said.
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