For only the fourth time in 40 years, giving to nonprofits has fallen. According to a recent report on 2022 philanthropic trends by Giving USA, giving levels are down 10.5% from 2021 to 2022 when factoring inflation. After two years of profound growth in giving—due in part to the COVID-19 pandemic and other current events—this 10.5% decrease in giving comes on the heels of high inflation rates and declines in personal disposable income. 

Nonprofits have struggled to maintain higher donation levels

Nonprofits faced unprecedented turbulence throughout the pandemic. A significant initial drop in stock market performance and high levels of volatility meant nonprofits were challenged by lower levels of donations while providing more services to their communities with growing levels of need.

Because of the significant ebbs and flows of giving patterns from 2021 to 2022, and now in 2023, nonprofits have been stretched for funding models that provide enough donations to cover core, essential programs in the long term. In the cases last year where the total number of dollars brought in by an organization increased, the power of each dollar donated was smaller when adjusted for inflation than the year prior.

Ultimately, this decrease means that it is harder for nonprofits to maintain and grow their programs. 

Despite an overall decline in giving, donor-advised funds soar

There is, however, a silver lining in this decline. Donors are increasingly utilizing donor-advised funds (DAFs) as their preferred method of making donations, with total grants and payout rates increasing significantly in the most recent year on record, despite the decline in overall giving rates.

Vanguard Charitable’s donor community reflect this trend as well. For the sixth straight year, donors achieved a record in total giving, with donors granting more than $1.87 billion in 2022. This number surpassed $2 billion in fiscal year 2023 for the first time ever.  

Vanguard Charitable's donor-advised funds are industry-leading 

Our goal is to continue to be a strategic partner to you in your giving decisions. Earlier this year, we nearly doubled our trusted investment lineup to 35 high-quality, cost-effective investments.

Our investment options have an all-in fee that is 87% lower than the DAF industry average, making our DAF an unparalleled combination of low fees, high-quality investment options, and leading philanthropic expertise and service. When you save on fees, you can send extra dollars to charity that might otherwise be spent on higher fees. 

Vanguard Charitable's donors are more generous and give more effectively 

The structure of Vanguard Charitable’s DAF gives you a distinct opportunity to give more over time while still supporting short-term needs. Even with rising inflation rates and decreasing disposable income, the age-old investing adage of “time in the market outweighs timing the market” rings true here.

You may be waiting to make a contribution, recommend a grant, or open a Vanguard Charitable account until inflation and costs of goods decrease. But our research in the recently released Why Giving Matters report found that over two-thirds of donors who use Vanguard Charitable DAFs immediately report a higher level of effective giving to charity, explicitly because of their use of a DAF. This confidence level only grows with each additional year that donors grant with a Vanguard Charitable DAF, with eighty percent of donors reporting higher giving effectiveness after 10 years of granting.

Vanguard Charitable donors are able to be more generous every year, giving more grants more often of higher value. All of these behaviors begin when a donor opens a DAF with Vanguard Charitable – and grow stronger the longer you grant with a Vanguard Charitable DAF. 

How you can be an active partner for the causes you care about most 

With so much unknown with the future of giving patterns, market performance, inflation rates, and the potential cost of goods, DAFs provide a more secure vehicle for your charitable contributions and ensure you can be an active partner for the causes you care about most for the long term.

Even with fluctuations in the giving landscape, you are uniquely positioned to give back with your DAF. If you’re looking to do more to support those in need, here are a few ideas to get started:

• Consider recurring grants and unrestricted giving. Unrestricted giving enables charities to be more agile in times of fluctuation.
• Be prepared to recommend grants outside of your longer-term giving plan. Your DAF provides you with the flexibility to support causes consistently and in times of unpredicted, increasing need. Vanguard Charitable donors have a history of giving back in times of crisis or disaster, such as providing support for Ukraine and responding to COVID. You can be a part of these immediate relief efforts.
• Adapt your giving decisions to give with recent inflation in mind.
• Now is an important time to consider replenishing your donor-advised fund to support your giving goals for the years ahead. By making consistent contributions—and taking advantage of tax-effective opportunities to do so—you are more easily able to serve as a steadfast partner to the charities you care about most. 

Ready to open a Vanguard Charitable donor-advised fund and strengthen your future giving? Act today and be a part of offering sustained support to nonprofits.