With National DAF Day approaching on October 8, now is a good time to ask a bigger question: Is your organization making the most of this rapidly growing form of philanthropy?
Why DAFs Require a Different Fundraising Strategy
Despite their rapid growth, many nonprofits still treat DAF gifts as incidental rather than strategic. Your nonprofit may have a blind spot if you only view DAFs as a gift payment method thinking the donor is just paying for their gift through a DAF grant, just like they might use a credit card. You might not be implementing the strategies that can be game changing.
Today, more than $230 billion is held in DAF accounts across the United States, and the number continues to grow each year. These funds represent billions of charitable dollars that donors have already set aside for philanthropy and received the related tax benefits. How well positioned are you to receive them and steward your DAF donors to deeper commitments and engagement?
We’ll give you a chance to find out at the end of this blog.
DAFs Change the Timing of Charitable Giving
A DAF allows a donor to make a charitable contribution, receive an immediate tax deduction, and then recommend grants to nonprofits over time. This creates new opportunities around gift timing. Traditionally, nonprofits focus heavily on year-end giving campaigns or a set period for their annual campaign, because donors often wait until December to make tax-deductible gifts. But with a DAF, donors may contribute to their fund at year-end for tax purposes and decide later where the money goes, during any time of the year not just when you are reaching out.
The strategic impact is that a donor’s tax decision and the charitable decision are now separated. The donor may recommend grants months or even years later and there is no additional tax benefit when the grant is distributed. In simple terms, by the time your organization receives a DAF grant, the donor has already taken the tax deduction. The decision to give becomes purely philanthropic.
For nonprofits, this changes the fundraising calendar. Instead of focusing solely on year-end appeals, or timed outreach, organizations must think about year-round relationship building with DAF donors.
Don’t Overlook DAFs as a Planned Giving Opportunity
There are two distinct ways nonprofits receive gifts from DAFs, and both deserve attention in your fundraising strategy. Many nonprofits think about DAFs in only one way: when a grant shows up in the mail from Fidelity Charitable, Schwab Charitable, or a community foundation.
But there is another type of DAF gift is far less discussed…and potentially far more transformational. Most DAF sponsors allow donors to name nonprofit beneficiaries for the remaining balance of their fund upon their passing. When donors take this step, their DAF functions much like a planned gift.
Some donors find this option appealing because it allows them to continue recommending grants during their lifetime while still supporting the organizations they care about long term. Your donor can now establish a planned gift and leave a legacy without having to create a separate charitable vehicle and there are usually no related costs to set this up.
Yet many nonprofits never mention this possibility to their donors! This is exactly why strategy matters.
How Strong is Your Nonprofit’s DAF Strategy?
At DBD Group, we often say, “A great plan is only step one.” The same is true with DAF fundraising. Knowing that DAFs matter is one thing. Knowing whether your organization is positioned to make the most of them is another.
So, how are you doing?
We created a quick, seven-question DAF Strategy Self-Assessment to help you find out. It looks at some of the fundamentals of an effective DAF strategy: leadership awareness, the ease of giving through a DAF, donor stewardship, and board and staff education.
It takes just a minute or two. At the end, you’ll discover where your organization lands in such areas as awareness within your leadership team, ease of DAF giving on your website, your stewardship practices for DAF donors and more. Your score will show whether your organization is a DAF Dynamo, a DAF Dabbler, or just getting started.
Make DAFs Part of Your Year-Round Fundraising Strategy
The continued growth of DAFs is not simply a passing trend. They represent a fundamental shift in how donors organize their philanthropy.
As development leaders, the opportunity is clear. We must develop the institutional muscle to build relationships with donors whose charitable dollars are already set aside. When organizations incorporate DAFs into their fundraising programs in an intentional manner, through every communication, in their stewardship plans, and planned giving conversations, they position themselves to access a growing pool of philanthropic resources to create transformational impact.
At DBD Group we’re always happy to have a conversation about how we can help you improve your fundraising strategies, including those around DAFs. If the assessment showed you have opportunity for growth, we’re here to help.
