MALVERN, Pa.--(BUSINESS WIRE)--Vanguard Charitable today released a guide for philanthropic-minded individuals to help them maximize their charitable giving using a donor-advised fund.
The guide, Invest in philanthropy: Four considerations when investing to achieve charitable goals, describes how donors can create an investment strategy that aligns with their giving goals and personal philosophies--for example, a family that wishes to support the community without putting economic pressure on any one family member and enable future generations to continue the family tradition of giving.
“One of the benefits of a donor-advised fund is the ability to invest assets long-term, monitor returns, and recommend grants to reach your charitable goals,” said Ann Gill, Vanguard Charitable’s chief philanthropic officer. “Applying these key considerations can benefit donors’ charitable goals and the causes they support. By taking the time to carefully evaluate investments, you’re committing to making greater change.”
Some investing considerations for donors include:
- Craft clear giving goals--Create a clear mission statement regarding what you wish to accomplish with your giving, including steps to reach these goals. Keep in mind that you may have multiple giving goals--short-term and long-term--and each goal may require different strategies. Donors should also define investment return and granting targets, and rebalance, monitor, and evaluate as needed.
- Create and maintain a balanced charitable portfolio--Diversify your investment options in order to minimize losses and maximize gains over time--increasing your philanthropic impact. Considering your risk tolerance and desired time horizon can aid in selecting funds best suited to help you reach your charitable goals.
- Minimize costs associated with investing--Invest in options with minimal fees, allowing more dollars to be invested rather than paying investment fees. The effects of minimizing costs can have a profound impact on a donor’s portfolio. As shown in the guide, over a 17 year period an account with $500,000 and an increased expense ratio of 0.75%--versus an expense ratio of 0.25%--with a similar portfolio allocation and grants can erode approximately $63,000 and nearly 7% of the dollars available for charitable causes. The positive effects of low costs are compounded over time and keep charitable dollars working for the causes donors care about most.
- Maintain a long-term approach to philanthropy--Adhere to a focused, consistent giving strategy that includes periodically checking and rebalancing your investment allocation. Monitoring investment options can help donors reach their goals and avoid portfolios from becoming unbalanced, which can generate unwanted risk. When necessary, even a set strategy is occasionally assessed against current constraints---such as retirement or a large gift for a new charity.
Vanguard’s principled investment philosophy--including its commitment to diversification, transparency, and cost-effectiveness--shapes Vanguard Charitable’s investment approach. Just as Vanguard Charitable’s philosophy informs it’s investing strategy, so too should donors philosophies inform their philanthropy, in order to create greater charitable impact.
The guide is available online at vanguardcharitable.org/InvestToGive.
About Vanguard Charitable
Vanguard Charitable is a leading U.S. nonprofit organization that fulfills its mission to increase philanthropic giving by administering a donor-advised fund—a tax-effective way to consolidate, accrue, and grant assets to charity. Since it was founded by Vanguard in 1997 as an independent 501(c)(3) organization, Vanguard Charitable has granted more than $5 billion to charity. More information is available at vanguardcharitable.org.