Donor-Advised Funds: Here’s what you need to know

May 3

I'm going to ::de-mystify:: what donor-advised funds are and what you need to know about them so you can raise more money. Let's do it!

What are donor-advised funds (DAFs)?

My favorite definition I've heard is "charitable checking and investment accounts".

Here's how it works:

You make a deposit (typically $5k minimum, sometimes less than that), receive an immediate tax deduction and can grant that money to charities of your choice at any point in the future.

You can invest a non-cash asset like stocks or securities (a lot of peeps do this) and avoid capital gains tax. Donors can invest tax-free in a DAF.

You can have one through a community foundation, an issue-specific fund like the Jewish Federation or commercial funds like these 3 big dogs: Fidelity Charitable, Schwab Charitable and Vanguard Charitable.

Why should I care about DAFs?

Your donors probably have them. They are the fastest growing way to give to charity today. I think, in part, this is because these commercial funds make it SUPER easy and clear to give to them. And nonprofits usually make giving more complicated. (You know I keep it real around here.)

And when you ask for a donation through credit card or check, your donors are likely to give less than they would if they were to give through their DAF.

DAF grants are typically $4,000+ in amount and 60% are unrestricted gifts.

We're still waiting on the 2020 numbers, but Fidelity Charitable made $7.2 billion in DAF grants in 2019.

How do I get my donors to give their DAF to my organization?

Great question!

Here are my 3 tips:

Install the FREE DAF widget on your website next to your donate button. Do this immediately. It's a no-brainer.
Send a quarterly reminder to your donors to give their DAF to your organization. Remind them. They make the gift into their DAF and sometimes forget that it's there. It's so easy to remind them and the reminders should be on your website in multiple places.
Encourage your donors to join the #HalfMyDAF movement. It's an amazing commitment started by Jennifer & David Risher to donate half of the funds in your DAF within this calendar year, by Sept 30, 2021 to be exact, and they will match the funds given up to $3 million!

[I am not affiliated with the DAF widget or the #HalfMyDAF movement in any way, just a BIG fan. I do not receive anything from recommending this except that you will raise more money and that's all I really care about, baby!! Woo hoo!]