Donor advised fund donors seen as involved, strategic, loyal

Over half the donors at Vanguard Charitable use a donor advised fund for most of their giving, nearly three in four are involved with the charities they support, and nearly all recommend grants to the same charity more than once, a new report says.

And over three in five are strategic about their philanthropy when giving with a donor advised fund, says “An Inside Look: 15,330 donors who are giving to charity with a donor-advised fund.”

The report analyzes giving trends from July 1, 2004, through June 30, 2013, at Vanguard Charitable, a national donor advised fund that has $4.4 billion in assets under management and has received $7.7 billion in contributions and made over 374,000 grants totaling $4.5 billion since it was founded in 1997.

The report also includes the results of 720 responses to a survey sent to more than 13,000 nonprofits supported by Vanguard Charitable, and 273 responses to a survey sent to nearly 2,900 donors to Vanguard Charitable.

Involved and strategic

While giving through a donor advised fund, the report says, 73 percent of donor are somewhat to very involved with charities they support, and six percent are more satisfied than before giving through a donor advised fund.

Sixty-one percent of donors are somewhat to very strategic with their philanthropy while giving through a donor advised fund, and 18 percent are more strategic than before giving through a donor advised fund.

Purpose of grants

Sixty-three percent of grants and 45 percent of grant dollars supported general operating expenses, with the remainder supporting special purposes.

Eleven percent of donors say they never recommend gifts for specific purposes, while four percent of donors say they recommend a grant when invited to a charity’s event.

Eighty-four percent of charities say they prefer to receive grants for general operating expenses rather than restricted gifts.

Timing of grants

With charitable giving traditionally taking place at the end of the calendar year, Vanguard Charitable says, it encourages donors who give through a donor advised fund to separate their tax-driven, year-end contributions into a separate account and into grants to charity.

And while the overwhelming majority of grant recommendations occur in November and December, the report says, only five percent of donors says they make grants only at the end of the year.

Ninety-six percent of charities say they prefer to receive donations throughout the year, rather than at the end of the year.

Repeat giving

Ninety-four percent of donors say they make grants to the same charity more than once.

And 47 percent of donors say they make grants of a similar amount of money each time they give to repeat charities, a trend that indicates “the first gift may be a good determinant of the value of future gifts,” the report says.

Size of accounts, grants

Vanguard Charitable accounts with higher balances tend to recommend fewer yet larger gifts to charity, while accounts with lower balances make many, smaller gifts, the report says

Accounts with less than $100,000 generate 54 percent of grants issued but only 23 percent of grant dollars, while  accounts with over $100,000 generate the remainder.

Accounts with less than $100,000 recommend 62 percent of all grants to religious organizations.

Among nonprofits, 63 percent prefer many small grants, while 37 percent prefer fewer yet larger grants.

Donor demographics

“Traditionalists,” or donors born before 1946, grant 63 percent of all dollars to go to historical organizations, while female-only accounts grant 20 percent of dollars to go to arts and culture organizations — their largest share among all interest areas — and accounts with a male and female donor recommend 89 percent of all grant dollars to civic organizations.

“Generation X” and “Millennial” donors, or those born between 1965 and 2002, represent only 6  percent of grants to arts and culture, and only 4 percent of grants to historical organizations, while Traditionalists recommended 46 percent of historical grants and 41 percent of arts and culture grants.

Age of accounts

Accounts that are three years old or less grant 40 percent of their dollars to education, compared to 17 percent from accounts that are at least 10 years old.

Those newer accounts recommend 7 percent of their grants to environment and wildlife organizations, a larger share than accounts that are three years to 10 years old.

In the first two years after being opened, accounts grants a large amount of money at an “extraordinary” rate. But heading in the recession, dollars grants from accounts three years old or less saw significantly less growth.

The two-year growth rate was 83 percent for accounts opened in 2004, 23 percent for accounts opened in 2006, and 80 percent for accounts opened in 2011.

Donor preferences

Fifty-six percent of Vanguard Charitable donors use a donor advised fund for 60 percent to 100 percent of their giving, while nearly 12 percent continue to use a check for most of their giving.

Ninety percent of donors are involved in more than one type of philanthropy, including donating financial assets.

Five percent of grants are anonymous.

Among over 9,100 total accounts, each of which may have up to two donors with advisory granting privileges but also can involve others, both donors make granting decisions for 50 percent of the accounts, one donor makes granting decisions for 41 percent of the accounts, and donors’ family members make granting decisions for 9 percent of the accounts.

Gender and age

Donors for 61 percent of accounts at Vanguard Charitable are male and female, 28 percent are male only, and 10 percent are female only.

Donors for 31 percent of accounts were born before 1946, 44 percent were Baby Boomers born from 1946 to 1964, 13 percent were born from 1965 to 2002, and 12 percent are mixed generations.

Among accounts with donors born from 1965 to 2002, 42 percent donors are male only, higher than among all accounts overall.

Eighty-five percent of all donors were born before 1965, and 1 percent of all accounts are advised by a donor born before 1946 and one born after 1964.

Todd Cohen

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