Make Friends of Donor Advised Funds

The explosive growth of Donor Advised Funds (DAFs) presents an excellent opportunity for fundraisers. The 2019 Donor Advised Fund Report tells us the number of DAFs in the U.S. has tripled, and grant dollars from DAFs to charities has nearly doubled over the past five years. In 2018, grants from DAF accounts to qualified charities increased 18.9 percent over the previous year and exceeded $20 billion for the first time. It’s safe to say that this generation of givers is embracing the flexibility, ease of use, and convenience DAFs offer. 

But some nonprofits are still warming up to the idea of happily accepting gifts this way, not to mention implementing a plan to actively market them. I’d suggest it’s time to embrace this trend and make it as easy and affirming as possible for donors to give to your organization through their DAF. Increasingly more donors are using DAFs, so it’s critical that your nonprofit be a successful recipient.

How can a nonprofit attract gifts from donor-advised funds?

Make sure donors know your organization welcomes gifts through DAFs. Chances are good some of your donors contribute to donor-advised funds. They may just not make the connection that they can use that as a gift vehicle when giving to your nonprofit. Let donors know on your website and in all of your communications that you can handle gifts from DAFs.

PRO TIP

When you receive a gift through a DAF, consider asking whether the donor would like to make recurring gifts through their donor-advised fund. Or perhaps they would designate your organization as the fund’s beneficiary in the event of death. Since all of the money in a donor-advised fund is already earmarked for charity, this gives supporters other options for giving.

And of course, make it as easy as possible for donors to give through their DAF to your organization. Consider placing a prompt on your website that allows donors to give to your nonprofit directly from their DAFs. To take it one step further, you can even embed a free widget on your giving page so donors can begin their transaction immediately.

While you’re thinking about DAFs, I would encourage you to do an audit of your back-end processes and make sure donors who choose to give this way still have a positive, donor-centric experience.

How is the gift coded in the database? Be sure to issue soft credits for gifts from DAFs. They aren’t technically from your donor and therefore can’t be reported that way in your database, but your development team should be able to see the attribution. DAF gifts shouldn’t be “invisible” because it’s important that they inform future communication strategies. For example, if a donor gives through their DAF exclusively you wouldn’t want to mark them as lapsed and treat them as such.

How do you acknowledge these gifts? They technically aren’t tax-deductible since the donor already received that benefit with they contributed to their DAF, so your standard letter may not be appropriate. But they certainly deserve to be thanked! Write a warm and heartfelt letter for donor-advised fund gifts that reports the impact that’s being made as a result of your donor’s generosity – and be sure to refresh it periodically.

If you’re ready to leverage the growing trend of giving through donor-advised funds and could use some guidance, we’d love to help! Send me an email at charity.abate@meyerpartners.com.