A Donor-Advised Fund Horror Story, From the Donor's Perspective

Donor-advised funds are an increasingly popular method of giving, especially among higher-capacity donors.

What should have been a joyous moment for everyone involved when my wife and I made our annual gifts through a new donor-advised fund was anything but, and it should be a cautionary tale to all fundraisers.

This story begins rather innocently a few years ago when we moved funds from the sale of several appreciated stocks into a new donor-advised fund. This transfer occurred in early October of that year, so when we were sent the login information for their rather nice online dashboard system, I decided “why not surprise the dozen or so charities we support annually with a late October gift?”

Little did I know how surprised a couple of them would be…

Within a few days we received all of the confirmations from our donor-advised organization. Then, as you might guess, we started receiving thank you letters and even a few wonderful phone calls from some the charities during the next couple of weeks.

However, not all of them sent an acknowledgement.

You are probably already guessing where this is going.

Surprise #1

Our first surprise happened during the beginning of December, about two months after making the annual fund gifts through the donor-advised fund. I received a phone call from one of the charities asking if we were going to make our normal annual fund gift this year.

There was a long stretch of silence on the phone when I stated the exact date from two months earlier that we had made the annual fund gift. The fundraiser finally came back on the line stating that she would look into it this very day and get back to me.

It took several days, but I received a phone call from the CEO of the charity thanking me for the larger annual fund gift of the year and stating the new administrative person – using a well-known fundraising software application – had, in fact, recorded the gift under the name of the donor-advised fund organization even though the notification clearly stated along with the fund name that it came from the Jay and Christie Love Charitable Giving Fund.

He asked us to dinner to further apologize. At dinner, we found out (on my request to research it) that their database administration position turned over nearly every single year and that it was the lowest paid position in the fundraising area.

Does this ring true for your organization too? If so, what other errors and omissions are happening? What other loyal donors are not being recognized?

You see, if our gift had not been large enough to warrant a phone call (which is silly since any multi-year donor increasing their gift annually, who is well above the average gift amount, should ALWAYS receive a call) we would have never been contacted!

Surprise #2

Literally the next week we started receiving additional appeal letters and emails from another one of the charities we made our annual fund gift early to.

When the 5th reminder came at the beginning of the very last week of the year guess what happened?

If you guessed that I called them, you are correct!

In this case, I was directed to the administrative person who looked the transaction up and sort of apologized. My favorite part was this person asking me if we would be using the charitable gift fund again in the future.

I came very close to speaking what was on my mind, which was the notion that we WOULD NOT be using our charitable gift fund for their organization again. (We did reduce our gift amount the following year and if you are wondering neither my wife or myself have heard personally from any of the senior management of the charity!)

Morals of the Story:

• Charitable giving funds are here to stay
• The amount of dollars in such funds are growing exponentially
• If a donor has a fund it should be noted in your database and special care given since a long stream of future gifts ending in a legacy gift is most likely!
• This type of giving should be discussed and proper handling instructions and follow-up reviewed with your ENTIRE staff
• You can NEVER go overboard with donor acknowledgements and relationship-building
• If a mistake happens it is an opportunity for even greater relationship-building!

So be on the lookout for donations made by a financial institution that you don’t have a pre-existing relationship with.

Do you have documented protocols for handling gifts made through donor-advised funds? Have you ever missed a gift from one, and salvaged the relationship? Tell us in the comments below!