Numerous factors can impact the budgets of charities and other non-profits throughout the year.
In particular, organizations may be concerned about fundraising forecasts in years of market downturns and uncertainty, mostly because of increased demands for their services. Additionally, some donors may not be able to contribute as much as they’d like when contending with inflation.
Fortunately, high-net-worth (HNW) and ultra-high-net-worth (UHNW) donors who have established donor-advised funds (DAFs) can often maintain or even increase their giving while recommending grants to organizations in need. While charities welcome funds at any time, donating and recommending grants from DAFs early in the year is especially helpful.
Why Are Early-Year Grants Helpful for Charities?
Charities have demands throughout the year. However, they receive a significant amount of their funding at the year’s end during Giving Season (November and December). Some statistics show that 17-33% of annual giving is concentrated in December. This can make budgeting more difficult, particularly when projections for the following year are economically uncertain.
At American Endowment Foundation (AEF), donors tend to recommend grants throughout the year, but Giving Seasons is our busy season. With so many grants in December alone, all grant recommendations are processed on a first-in-first-out basis, and grants to new charities may require additional vetting. This means some grants made later in the year may not be received or processed by charities until the following year – even when made before the granting deadline.
How Financial Advisors Can Help Clients Make the Most Impact
To ensure charities receive funding, financial advisors can encourage clients not to wait until November or December to recommend grants. For clients with newly established DAFs, it can be helpful to remind them that they already received a tax deduction when they contributed assets – there is no tax benefit to making grant recommendations at the end of the year.*
Some donors want to respond to the year-end appeals of their favorite charities, especially since the holiday season is a time of giving and generosity. However, many wealthy donors who have DAF accounts realize that if they plan and recommend their grants earlier in the year, they can have an even greater impact. These generous contributions are greatly appreciated by the organizations they support and can help them plan for an impactful year.
Advisors may also want to reach out to clients about recommending grants in the wake of natural disasters and humanitarian crises across the country and abroad. Events like floods, hurricanes, tornadoes, and more can happen at any time, and relief services often need funding fast, which DAFs can help provide.
Ready to Expand Philanthropy Year-Round? Talk to AEF.
AEF can help financial advisors and their clients, as well as donors of all types, determine the best strategy for year-long charitable giving. Contact us today to start the conversation – we’re ready to talk DAFs with you.
*Note: The information provided herein is for informational purposes only and should not be interpreted to constitute legal and/or tax advice. Donors should consult their legal and tax advisors regarding their specific situations.