Donor-Advised Funds and Your Nonprofit:
Tips for Success
Ken Marotte, Senior Writer and Managing Director
One is hard-pressed to consider recent trends in grantmaking without acknowledging the meteoric rise of donor-advised funds (DAFs). Heavy hitters like Vanguard, Schwab, DonorsTrust, and Fidelity report truly record-setting growth. Through DAFs, donors enjoy unprecedented flexibility to support the charities that matter to them.
The benefits of DAFs to donors are well-known. But what about the other side of the coin? How can fundraisers and their organizations position themselves for a piece of this lucrative and rapidly expanding pie?
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- Customize your database with DAFs in mind. Track the channels through which your individual donors give by adding a custom field or soft-crediting the gift. Having this information will enable you to recognize your donors appropriately and tailor future asks to their unique preferences.
- Consider the source. At the end of the day, DAFs are opened, guided, and funded by individuals. Build robust and intentional relationships with individual donors. Strengthen your major gift efforts. If in the past you’ve regarded individual giving as subordinate to foundation or corporate support, it might be time to reconsider that assumption lest you miss out on low-hanging fruit.
- Find alternatives to research. While research will always be key to a successful fundraising operation, it has its limitations. With donor anonymity one of the key features of DAF giving, fundraisers must embrace ingenuity in identifying and engaging DAF donors. Leverage your network. Ask for valuable introductions. Invite individual prospects and even suspects to your events.
- Encourage DAF giving. The power of suggestion is strong. Use your fundraising and marketing materials to encourage donors to support your nonprofit via DAF. On your blog or in your newsletter, you might even profile major donors who’ve supported your organization in this way (with their permission, of course).
Where do DAF personnel fit into this equation? In short, it depends. The National Christian Foundation, for example, encourages nonprofits to connect directly with donors, as employees rarely coach donors or provide advice. DonorsTrust, on the other hand, welcomes annual reports and is happy to meet with nonprofits. “While we don’t pick winners or losers,” says Director of Growth Strategies Peter Lipsett, “donors recognize our institutional know-how, and occasionally ask our opinions after being approached by organizations.” DonorsTrust staff often appear at events to enhance their knowledge, and better serve their clients in doing so.
The DAF is an unusual beast that’s hard to wrangle and difficult to read. And it’s not going anywhere. Follow these steps to put yourself ahead of the competition and take advantage of this wellspring of potential support for your organization.
Ken Marotte serves as Senior Writer and managing Director at AC Fitzgerald.