Sift the powdered sugar and cocoa powder together in a medium bowl (use a sifter or simply a fine mesh sieve; this helps to break up any chunks).
Slowly whisk in the cream and vanilla to make a smooth, pourable glaze, stirring constantly until it comes together. Stir in the water (or milk) if necessary. (If using milk instead of cream, use 4 to 6 tablespoons milk and skip the water.) If the glaze is too sticky, add a teaspoon more water until it comes to a smooth, thick consistency. Use for dipping donuts, or drizzle with a fork across cookies, muffins or cake (makes enough for at least 12 donuts).