Love Them Or Hate Them, But Don’t Ignore Donor Advised Funds

At a recent board meeting for a national association focused on collecting immense data for the charity sector, the discussion drifted to DAFs (donor advised funds). The consensus prediction was that within the next five years the top five charities in the United States, and possibly the world, based upon annual donation amounts will be Donor Advised Funds!

Think about that very fact and ask yourself or your fundraising team this question…

Are you fully prepared to embrace and take full advantage of this game changing opportunity?

If you are not, do not panic, you are not alone!

However, the time is NOW to begin taking the steps to allow your organization, and therefore your mission, to be able to not miss out on the billions of dollars flowing into these new investment vehicles.

An article written by Rebecca Moffett, who actually works for Vanguard Charitable, provides an excellent overview of Donor Advised Funds and lays some groundwork for being prepared.

I particularly love the section in Rebecca’s post on this vital topic:

HOW TO MAXIMIZE YOUR RELATIONSHIP WITH DONOR-ADVISED FUNDS

Generally, nonprofits cannot solicit gifts directly from sponsoring organizations, but there are many ways you can strengthen your relationship with DAFs:

  • Actively promote your ability to accept grants from DAFs. Consider mentioning donor-advised funds on your website, in solicitation offers, and on promotional materials. You can also suggest that your donors with DAFs set up automatic recurring grants.

  • Educate your entire organization about gifts from DAFs so that they can be processed smoothly. Remember: DAF advisors are interested in efficiency and convenience! For example, you should not send a tax receipt to DAF advisors, as they’ve already received one from the sponsoring organization, but you may send a thank-you letter to help stay connected.

  • Steward sponsoring organizations. Don’t send them solicitation letters, but have a working knowledge of prominent sponsoring organizations. Feel free to send them an acknowledgment letter when you receive a gift.

  • Be familiar with IRS rules concerning DAFs. Grants from a DAF cannot result in impermissible benefit to the DAF account advisors, their family members, or the donor to the DAF account. Grants must be made exclusively for charitable purposes. Vanguard Charitable includes language with each grant to help you understand how the funds can be used.

One More Crucial Step To Take

There is one other key step that most of you can take that will add to the superb steps above and greatly increase your understanding of the Donor Advised Fund world.

That step is to open up a DAF of your own. By going through the process and seeing how Vanguard or Fidelity or Schwab communicates with you as the client and donor will help you know just what each step is, what the donor is seeing as advantages and most importantly how charities are presented to the donor to pick from.

Just imagine how much more expertise and confidence you will have regarding this emerging juggernaut to the fundraising profession!

When I mention DAF’s during my presentations at fundraising conferences, I often ask how many in an audience of several hundred have their own DAF. Seldom do I see more than a dozen hands go up, and most of those belong to board members attending.

Here are basics with Schwab for opening a DAF: https://www.schwabcharitable.org/public/charitable/features/faqs

The coming rise of Donor Advised Funds can provide bountiful opportunities for funding charitable missions. Those fundraising professionals and nonprofit executives who undertake the effort to fully understand and embrace this tidal wave will be swept upwards with it rather than be overwhelmed. Best of luck with this amazing opportunity!

Stay Together - How to Encourage a Lifetime of Donor Loyalty

Jay Love

Jay Love

Co-Founder & Chief Relationship Officer at Bloomerang
A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman.
Jay Love
By | 2018-10-03T13:25:21+00:00 October 4th, 2018|Fundraising, Nonprofit Sector|

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