Charitable strategies part two | Plan to make a difference

May 28, 2019

Charitable Strategies

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
Large, one-time gifts are a great choice when you are familiar with the charity's long-term goals and confident about how they will utilize your gift. Large, one-time gifts enable the charity to focus less on cultivating additional gifts or processing donations and more on fulfilling its mission.For example, a large one-time gift can symbolize progress for an organization's fundraising campaign. Because of thegift's size, the charity will likely be eager to engage with you further.	Scheduled grants enable you to invest in the cause and adapt your giving as you evaluate how the charity has used the funds. The remaining dollars to be granted in subsequent years are invested and grow tax-free, opening the door to growth and the possibility of additional dollars for grants in future years. Charity representatives can remain consistently engaged with you when you regularly give, allowing them to build a sense of community around the cause.
What are the potential issues?
The donor may not communicate long-term plans to the charity. The charity may swiftly spend down money in anticipation of similar gifts in the future. The organization may spend the funds in a way that does not meet your charitable goals, and there is little remediation beyond stopping future donations.	The donor doesn't communicate plans to charity; their planning isn't optimized, and scheduled gifts aren't built into the budgeting process. Your charitable plans may change and the organization budgeted based on receiving a steady stream of funds.
What are the potential successes?
When a charity has a critical need, a donor may opt to help out. For example, aid organizations require rapid and hefty funding when natural disasters strike.	As a donor gets to know a recipient charity through regular grants, they may be asked to showcase that relationship by recommending a lead grant in a campaign or helping with larger projects in addition to annual grants.

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.

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