Despite the coronavirus pandemic and its impact on the economy, 2020 was another banner year for donor-advised funds (DAFs). When the markets initially plunged, stay-at-home orders were issued and fundraisers were canceled, DAF donors stepped up to make large and critical grants in the spring and summer to support both their favorite charities and others that addressed critical needs.
When markets bounced back, donors continued to give, and year-end giving was again strong. In fact, many DAF sponsors actually increased grants to charities this year.
Many DAF donors also contributed additional amounts to their accounts so they would have substantial assets from which they could quickly make grants in the future. Others who had not previously created DAF accounts opened them with the help of their advisors.
Though there was another effort to create legislation to pressure DAF donors to grant more, DAF donors proved that they didn’t need to be forced to make grants because they had already responded generously to the need that existed. Nonprofit organizations expressed their appreciation for the numerous DAF contributions that enabled some to continue to operate.
As an advisor, we play a large part in helping our clients plan their charitable giving. The events of the past year have affected clients to varying degrees. Some clients had never previously been charitable and wanted to begin, while others had always been very generous and wanted to go beyond what they had previously done. And of course, a small portion of clients had never given to charity and not even a pandemic would change that.
In the end, the charities and the people they help were the biggest beneficiaries of the generosity of DAF donors. Nearly everyone was impacted by the pandemic or knew someone who was, so these donors who maintained or increased their level of giving could take pride and comfort in knowing that they were able to make a difference. At Sherman Wealth, we always stress the importance of giving back to the community, especially when you are in a financial position to do so. If you are considering giving back or donating to your favorite charity, please reach out to us with any questions you may have on going about your charitable giving. We are happy to help in any way or discuss your options in a free 30-minute consultation on our site.