Many nonprofits wonder how to identify people who have DAFs and how to get their cause in front of them. It can be a little complicated but with some investigation into how the DAF is administered, you can find the person behind the DAF and start to share your mission and impact with them. Let’s explore...
DAFs (donor-advised funds) are philanthropic vehicles established by individuals, families, or organizations to facilitate charitable giving. Grantmaking through DAFs has increased every year since 2009 and has more than doubled in the past five years. The following table illustrates just how big of an impact DAFs are making on the charitable landscape. While DAFs hold roughly 20% of the assets compared to private foundations, their distributions are much higher by percentage (22.7% vs. 8.6%)*.
Donor Advised Funds are administered by sponsoring organizations, which manage the funds, invest assets, and oversee grant distributions. They may require a minimum contribution (approx. $5K-$25K). There are three primary types of sponsoring organizations:
Single-Issue Funds are a specialized type of DAF sponsored by organizations or institutions focused on specific causes or areas of interest such as education, healthcare, environmental conservation, or religious missions. Typically, these are set up by large universities, hospital systems, or national and global movements. Oftentimes donor contributions to single-issue funds are made with the understanding that the funds will be designated for a narrow purpose or to a select set of organizations chosen by the fund’s administrators.
National DAFs are charitable arms of financial custodians like Fidelity, Schwab, UBS, and others. These provide donors with broader charitable giving options and investment opportunities, and many do not require a minimum contribution making them accessible to a broader range of individuals. However due their scope and size, National DAFs generally do not make recommendations to donors on who to support.
Community Foundations are the third type of sponsoring organization and according to the most recent data, make up nearly 23% of total grant dollars from DAFs. In addition to pooling contributions from multiple donors to create a collective fund, many offer donors the opportunity to set up individual DAFs and are much more active in recommending nonprofits to DAF account holders.
Getting a nonprofit cause in front of DAF donors associated with a community foundation requires strategic outreach and relationship-building efforts. Here are some practical steps a nonprofit can take to accomplish this:
These strategies will not only help you to better connect with donors who utilize DAFs. Building closer relationships with your community foundation can lead to positive outcomes for your organization for years to come.
If you’d like to learn more about strategies to engage your DAF donors, please reach out to us.
*Source: The 2023 DAF Report published by the National Philanthropic Trust https://www.nptrust.org/reports/daf-report/
THIS MONTH'S FOCUS
Things are changing in the world of nonprofit leadership and nonprofit fundraising. New generations, new technology, new ways of communicating... these trends are challenging all of us to think differently. This month, join us as we explore the opportunities we have to try new things, explore new ways of engaging, and meet the challenges of the future.