Elaine Kenig , chief communications officer at Vanguard Charitable , says philanthropic giving in general has declined or remained steady , in part because inflation hit donors hard , but she says the exception is donor-advised funds . At Vanguard , grants to charitable organizations were up in 2022 by 5 % over 2021 and for the first six months of this year grants increased by 24 %.

With a donor-advised fund , an immediate tax deduction is realized , and the funds then continue to grow tax-free until the person who set up the fund decides at some point in the future what organizations to give money to . “ Donors are able to respond to a need because the dollars have already been allocated for charity ,” Kenig says . For instance , donors in these funds were able to respond to community organizations that needed assistance during the pandemic and are still giving to organizations involved in the support of Ukraine .

Donor-advised funds themselves are expanding philanthropists ’ possibilities . Vanguard Charitable recently introduced 16 new investments to expand its fund lineup . “ The expansion provides donors with new actively managed funds and more options within U . S . equity markets , enabling greater portfolio customization ,” Vanguard Charitable says . The organization now offers a total of 36 investments to bolster its donors ’ wide-ranging philanthropic goals .

“ Through conversation with our donors , we identified an appetite for an even greater number of high-value , low-cost investment

With a donor-advised fund , an immediate tax deduction is realized ... the funds grow tax-free until the person who set up the fund decides what organizations to give money to . options that allow donors to customize their investment blend and continue to grow their charitable impact ,” says Rebecca Moffett , president of Vanguard Charitable .

Karen Kardos , the global head of philanthropic advisory at Citi Private Bank , notes that donor-advised funds are growing in part because many donors do not want the administrative duties and the public reporting requirements that come with creating a private foundation , such as the requirement that they must give at least 5 % of a foundation ’ s net worth to charity each year and document the giving .

The nature of grants is also changing as women and younger generations come into their own in the philanthropic realm , she says . Religious organizations , human services and education have remained the top three categories of giving for years , the experts say . However , “ women and younger generations are becoming the decision-makers as the great wealth transfer takes place ,” Kardos says . “ In fact , members of younger generations already are influencing giving as interest shifts to social issues in the wake of such things as George Floyd ’ s death . Younger generations think of philanthropy more broadly than older generations .”

Other donor-advised funds have also seen increases in spite of the volatile market that is costing some philanthropists money . Brandon O ’ Neill , president of charitable planning at Fidelity Charitable , said the organization ’ s donor-advised fund has seen record amounts of donors come in because the structure provides them with a hedge against inflationary pressure and increases the efficiency of giving .

“ During the pandemic , donors saw [ these funds ] as a resource for giving to community organizations ,” O ’ Neill says . “ Human service causes are becoming the new fastest growing giving sector .”

Schwab Charitable reported strong giving

8 | FINANCIAL ADVISOR MAGAZINE | SEPTEMBER 2023 WWW . FA-MAG . COM