Unexpected grant-giving through donor-advised funds (DAFs) leads to greater overall charitable contributions, according to new research from Vanguard Charitable. Unexpected giving goes toward events such as natural disasters and humanitarian crises.
Vanguard’s 2024 Why Giving Matters report found that clients who make unexpected grants to Vanguard’s DAFs gave 24% more in expected granting than donors who did not give unexpected grants. Donors who used their Vanguard Charitable DAF for unexpected grants gave 39% more overall than those who used their DAF only for expected, ongoing giving.
“This unanticipated response of giving, the idea that this is additive, is not what you would initially expect,” Elaine Kenig, chief communications officer at Vanguard Charitable, told Crain Currency. “You might think resources are finite, I can’t give to everything, I’m going to have to make choices. That’s absolutely true; but because the dollars are invested with the donor-advised-fund, and they have the ability to grow over time, our donors are able to do both.”
Vanguard Charitable gives about $2 billion per year to charity through its donor-advised funds. The funds have become an increasingly popular philanthropic tool for ultra-high-net-worth donors, who get an income tax deduction when they put money into a DAF. Donors give up legal control of their money but can recommend which charities get their money and when, while operators like Vanguard Charitable also invest their cash into other markets.
“It’s just easier. ...They do everything — all the accounting, the infrastructure,” former Microsoft CEO Steve Ballmer, who distributes about $400 million per year to a DAF managed by Goldman Sachs, told Crain Currency in 2023.