Market Volatility Has Potential To Impact DAFs & Crypto Philanthropy
Major philanthropy trends over the past several years have included the rise of crypto philanthropy and donor-advised funds, alternate forms of giving that may see the trickle-down impacts of the current bear market and overall market volatility. Donor-advised funds, or DAFs, have seen a surge in popularity over the past several years as market-tied vehicles for philanthropic giving with an estimated $160 billion according to NP Trust. While DAFs receive criticism for their sometimes conservative disbursement and lack of immediate impact, another potential flag is that they are affected by market volatility. This will potentially impact giving because of the percent based donation targets for these funds which hover around 20% according to NP Trust. With the S&P 500 down ~20% on the year, and having its worst week since the start of 2020, contributions within the past year to these funds may have decreased in value by as much as $38B. Bitcoin, a cryptocurrency that serves as another popular vehicle of charitable giving, is worth less than ⅓ of its peak value in November of last year, potentially diminishing enthusiasm for charitable donations among investors. The Giving Block, a major player in the crypto-donation space, offers DAF investment options that are susceptible to changes in the market landscape. This might be a rough year for overall donations from these sources, though it would be worse if this were happening in December…
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[00:00:00] Today on the nonprofit news feed. We’re talking about what the market drop might mean to donations. Nick, how’s it going? It’s going good, George, how are you? I’m doing alright today. That’s good because we’re about to go into a kind of complicated, but really. Uh, timebound story, really relevant story. And that is that market volatility has the potential to impact DAFs and crypto philanthropy.
[00:00:30] So two major philanthropy trends that we’ve been following over the past couple years on this podcast have been the increase in contributions to DAFs, which are donor advised funds, as well as the increase in crypto philanthropy. Now DS have seen a surgeon popularity and their vehicles for Phil philanthropic giving with an estimated $160 billion in value, according to nonprofit trust and DAS received some criticism for, uh, you know, maybe lackluster rates of disbursement and.
[00:01:06] Lack of immediate impact something else that is a potential downside of, uh, putting your charitable giving into the markets essentially is that the S and P 500 is down 20% over the year, just had its worst week. And that. Any kind of asset in the market is being hit right now. Uh, the flip side of that on the crypto side is that crypto is way down essentially crashed.
[00:01:35] Uh, Bitcoin is at less than a third of its value than it was at its peak in the fall. And that is likely to have, uh, put negative pressure. People who might otherwise be thinking of, uh, donating cryptocurrencies to nonprofits, which is another trend. So their overall story here is that, uh, the markets may be messing with these alternate forms of charitable giving this year.
[00:02:05] George, what are your thoughts? I’ll say the larger story is around. I think DAFs, the donor advised funds, which are essentially, you know, donate now give later ish in this optimistic look of money. You’ll appreciate over time because
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