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[ASK AN EXPERT] 4 Top Tips To Increase Donor-Advised Funds To Your Nonprofit
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Our Ask An Expert series features real questions answered by Claire Axelrad, J.D., CFRE, our very own Fundraising Coach, also known as Charity Clairity. Today’s question comes from a nonprofit employee who wants advice on how to increase donor-advised funds:
Dear Charity Clairity,
I’ve been hearing a lot about donor-advised funds as a growing source of philanthropic dollars, but I’m not sure how to go about leveraging some of this money. My board members tell me we should be getting more of what they’re calling a potential “goldmine.” Do you have any tips?
— Need Quick DAF Advice
Dear Need Quick DAF Advice,
I’ve long been advocating for a special fundraising strategy targeting new and ongoing gifts from philanthropists who’ve established a philanthropic piggy bank in the form of a donor-advised fund (DAF). [See here, here and here.]
Jeff Brooks argues on the Moceanic blog: “None of us can afford to ignore DAFs anymore.” According to a recent survey, organizations that actively seek DAF grants raise a lot more money than those who don’t: 2.2 times more revenue. The survey also found that 54% of U.S. nonprofits never solicit DAF donations at all. That used to be no real problem. But now, if you ignore DAFs, you could be leaving donations on the table!
The growing pot of philanthropy
DAFs have become the fastest-growing philanthropic vehicle, accounting for roughly 10% of all giving per the Chronicle of Philanthropy. Not millions, but billions! The 2024 National Study on Donor-Advised Funds suggests the number of DAFs has increased more than fivefold from 2010 to 2020. If DAFs continue on the trajectory they have been on in recent years, Bridgespan expects grantmaking from DAFs will exceed that of foundations by 2029.
So, it makes a lot of sense to seek out and court these growing numbers of donors who can provide steady funding – even in challenging times.
But how do you do this?
4 tips
Keep in mind that while donors get an immediate tax deduction for putting money in their DAFs, there are no requirements for how quickly it’s distributed to charity. This makes it essentially a charitable wallet for DAF donors. They can’t do anything else with this money except give it away to charity. Your job, as a philanthropy facilitator, is to help them!
TIP 1: ASK donors to dip into their own DAF piggybank
Some of your donors may have money parked in their philanthropic piggy bank (aka DAF), and they’ve simply forgotten it’s there. They can’t give it to you simply by clicking the “donate” link in your GivingTuesday or year-end appeal. They have to make a request from the administrator of their DAF. It’s not hard, but a well-placed reminder from you can make a huge difference:
“Do you have a Donor-Advised Fund or private foundation? Thank you for being a proactive “philanthropist” (“lover of humanity”), and making it a priority to help solve the world’s most pressing problems. If you have undistributed funds just waiting to be put to work, please reach out to your DAF or foundation administrator now to recommend a grant to [your charity] or to the charities of your choice. You will be making a real difference in the lives of those who could use a helping hand (or whatever reason makes sense for your charity).”
I encourage you not to be self-defeating by telling yourself you don’t have the right donors. The demographics of folks who create their own DAF may surprise you. Per Aspire Research Group Millennials opened 13% of DAFs in 2019 compared to only 6% in 2014. So, they’re not just for seniors. They’re also not just for the mega-wealthy. And, they can be opened many places for as little as $5,000.
TIP 2: ASK previous DAF donors to give again
If you have donors who’ve given via a DAF in the past, but have not done so yet this calendar year, reach out to them individually. The most efficient way is to make a phone call, followed by an email (or a text if this is something they’ve opted into). Do this NOW; don’t wait for the last two weeks of the year when many folks are traveling or otherwise busy with holidays.
“Last year you generously made a gift through your Donor-Advised Fund – thank you! We’ve not yet seen a gift from you this year, and are hoping we’re still on your grant list. If you’ve made a recommendation, and we should be on the lookout for it, please let us know so we can thank you properly. If you have not, and I can answer any questions to help you with your decision, please let me know. Even if the answer is “no” this year, it would help us to know your reasons. In fact, that would be a gift to us, too! As always, your support means a lot.”
TIP 3: STEER would-be donors to established DAF repositories
Sometimes a donor wishes to make a significant gift via a transfer of appreciated real or personal property. If you’re not set up to accept such a gift, this can be an opportunity to suggest they give it to an already-established DAF repository such as Fidelity Charitable, Charles Schwab Charitable, Vanguard Charitable and National Philanthropic Trust. Or you might steer them to a local community foundation or faith-based organization with which you have a relationship. It never hurts to make your donors their donors too. A rising tide raises all boats, and it’s good for you to establish relationships with your local funders whenever you can.
You might also consider meeting with your local community foundation, Jewish Community Federation, or other DAF repository to see if they have any DAF donors who might consider a gift to your organization. Part of their job is making recommendations to their donors, and they may not be aware of how what you do and what their donors care about are a perfect match!
TIP 4: Make DAF giving easy!
Make sure donors know you accept these gifts; make the process of giving as simple and transparent as possible. If you make giving from credit cards or via check the only “instant” way to respond to your appeals, you’re going to leave money on the table. So, include DAF giving on your donation landing page. Ideally, include a DAF widget with the instructions: “Give from my DAF.” Chariot, the newest DAF payments company, enables an “express checkout” experience called DAFpay within a nonprofit’s donation forms, akin to Google Pay or Apple Pay. There are others too, including DAF Direct and dafwidget. Here are some pros and cons of each.
Even if you don’t include a widget, publish your tax ID number. Donors may need this to submit to their DAF administrator. Don’t make them search for it!
I hope this advice is quick enough for your purposes and you now have some good strategies for moving forward to leverage more DAF dollars.
— Charity Clairity (Please use a pseudonym if you prefer to be anonymous when you submit your own question, like “Need Quick DAF Advice” did.)
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