In the fourth quarter of each year the National Philanthropic Trust releases their annual Donor Advised Funds Report.
This is significant for every nonprofit engaged in fundraising to take notice because donor advised funds or DAFs for short, are truly changing the landscape of major gift fundraising and therefore the nonprofit sector.
Now that the majority of the top ten largest charities in the United States are DAFs, this impact is only going to keep increasing. Every charity engaged in fundraising should focus attention on soliciting and properly tracking major gifts coming from donor advised funds.
In my opinion, gifts/grants from DAFs will be the largest percentage of the annual dollars received by 2030, which is basically just ten years away.
Let’s review my top five takeaways from the 2019 Donor Advised Funds report.
1. Contributions to DAFs Comprise 12.7% of all Individual Giving
Think about the increases that have occurred over the last 5-10 years in this realm. They have gone from zero to nearly 13%, representing over 37 billion dollars.
The future impact will grow exponentially as DAFs are no longer considered tools to be used by only wealthy families. Numerous DAFs can now be opened with merely $5,000 in funds for charitable use. In addition, they are as simple to manage as a checking account with significantly more tax advantages!
2. Total DAF Assets Available for Grants is 121.42 Billion Dollars
The majority of these funds are still waiting to be granted to a charity. This is a huge opportunity for those charities that have properly recorded who among their constituents have DAFs.
Proper relationship building and maintaining are key to opening up the chance for a portion of those billions to come your direction. Honestly, this is really not much different than the relationship building approach used for other major and legacy gifts, except for the extra care needed during the record keeping and acknowledgement processes.
We have personally seen these processes not handled properly, usually due to a lack of knowledge by the charity staff. Hopefully, this post and others like it will help.
3. Grants Made From DAFs Increased 18.9%
Please note for this key statistic that the rate of growth is faster than the current level of giving mentioned above.
Honestly, this rate of growth could move up significantly if the owners of the DAFs were motivated to make more and larger grants. This is because in most DAF accounts, the amount available to grant is far larger than the grants made in any single year. Often as much as 80% is still waiting to be put to charitable use.
Once again, this spells opportunity!
4. The Number of DAF Accounts Grew 55.2%
The actual number of DAFs in the United States is now 728,563. This total should surpass one million in 2020!
We know that nearly every DAF will make multiple grants at the major gift level in 2020. How many of them will be coming to fund your mission?
5. DAFs Pay Out at a Rate 4 Times Higher than Private Foundations
Add to this fact above, the key premise is that there is far less red tape in soliciting a grant/gift from a DAF than with a private foundation.
Why? A single person or a single couple controls most DAFs.
Plus, those individuals with DAFs often love to become personally involved with the mission of the charities they support. Talk about a chance for relationship growth!
The report goes on to share many other interesting and notable facts. Yes, there were a couple of areas such as the grant payout rate that had a slight percentage decrease. However, when you consider the over 50% growth in the number of DAFs this is understandable.
The overall takeaway is that DAFs are critical to funding and expanding the mission of most charities. Those charities who understand and seize the opportunity to work more closely with owners of donor advised funds will be aptly rewarded well into the future!