Charitable strategies part two | Plan to make a difference
May 28, 2019
In part one of our charitable strategies series, you learned how to make the greatest impact with your charitable giving by using cost-saving tools. Here in part two of our series, we will guide you in thinking through how you want to time your granting and why.
Effective granting is all about timing
Many of us question when the best time to donate to our favorite charities is: at year-end, only when they ask, all at once, over time? Charitable giving is often driven by a tax deadline, but a donor-advised fund (DAF) can change this. Organizations like Vanguard Charitable that sponsor DAFs are themselves a charity, so contributing to a DAF may entitle you to a charitable deduction upfront*. Later, when the timing is right, you may recommend grants to the organizations you wish to support, offering you the freedom to engage in thoughtful philanthropy.
When thinking about the right time to give, first assess your philanthropic goals, budget constraints, desired gift amount, and the mission-driven needs of the charity you want to support. For example, a larger gift may help meet a campaign goal, while smaller, paced gifts may encourage better budgeting by the charity over the long term. The time of year you give, such as during peak donation season or the fundraising off-season, also affects a gift’s impact. Consider engaging directly with the charity's fundraising team to find out when the charity needs your gift the most, and adapt your giving plans accordingly.
All at once or over time?
As a donor, you may decide you want to recommend $10,000 to a charity. Is it better to give that a one-time lump sum, or should you schedule smaller grants over a multi-year period? When deciding, consider: what works best for how you want to give and think the charity will best use those funds. In the two giving scenarios below, we look at the benefits and potential pitfalls of each.
Two giving scenarios:
Scenario 1: Grant a single lump sum to the charity.
Scenario 2: Schedule annual grants to the charity.
|Year 1||Year 2|
|Year 3||Year 4|
What are the potential issues?
What are the potential successes?
The needs of nonprofit organizations vary, as do donors’ abilities to fill those needs. To be effective within your giving constraints, consider the timing of your contributions and grant recommendations—both the month of the year and the pacing. You have the potential to fill gaps in the charitable giving space, whether that be by making a one-time grant or a recurring one.
* Contributions from a private foundation or other donor-advised fund program are not eligible for a charitable deduction.
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