A study of donor-advised funds shows that time matters too.
According to donor-advised fund sponsor Vanguard Charitable’s survey, established DAF donors give more, and more consistently, on an annual basis than new DAF donors. Results of the report, "Why Giving Matters," suggest that opening a DAF leads to more effective giving practices over time.
The study showed that 71% of donors who have had their accounts for 10 years or more give in larger amounts as a result of their DAF, and 68% agree they give more consistently to their favorite charities with their DAF. The report also showed that accounts with at least 10 years of tenure give significant amounts to grantees on an annual basis, about $17,000 more on average in 2022 than accounts with tenures of six years or less.
"We are so inspired by our donors’ continued generosity," Rebecca Moffett, president of Vanguard Charitable, said in a statement. "The trends we see here reinforce the exponential impact DAFs have on nonprofits the longer an account is active.”
Moffett added that donors indicate their strong charitable commitment when they open a DAF, and that commitment is refined over time.
Across all tenure groups, the study revealed that more than two-thirds of DAF donors reported giving more effectively because of their donor-advised fund. That said, donors who have had their accounts for 10 years or more issued grants that were 61% larger on average in 2022 than grants from donors with a tenure of six years or less.
Renae Ransdell, a wealth advisor at SageView Advisory Group, says that charitably inclined individuals are going to give regardless of the tax benefits. However, most prefer to give in a tax-efficient manner if that's an option.
“For our clients, donor-advised funds are a meaningful resource to fulfill their charitable goals while realizing some tax benefits," she said. "Once funded, their DAF takes the pressure off tax planning, allowing clients to focus on the causes important to them and advise on how those assets are directed.”
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