Donor advised funds (DAFs) offer flexibility, simplicity and tax advantages, making them a smart choice for donors. According to the National Philanthropic Trust, donor advised funds (DAFs) hold more than $228 billion in assets, and 12% of individual giving dollars now comes from DAFs. DAFs, which allow donors to get the tax write-off immediately, are like private foundations but with fewer regulations. Money in the fund is invested, and donors can recommend grants to their favorite charity. However, unlike foundations, there are no distribution requirements for DAFs, making them a more attractive option for donors but a continuing frustration to fundraisers and the nonprofits they serve.
Rather than sending grant requests to large institutional fund holders or banging down the doors of your local community foundation asking for their donor list (which they will not and should not give you), here are some easy and effective ways you can tap into the resources being held in donor advised funds:
- Include donor advised funds in all conversations and calls to action for giving in your communications and appeals. It can be as simple as an additional checkbox on a response card or a PS on an appeal letter.
- Feature giving from donor advised funds in the “ways to give” section of your website. Make it even easier for your donors to give by adding a donor advised fund widget to your website (check out the free DAFwidget).
- Profile donor advised fund donors in your communications, ask them to share why giving through a DAF works for them and your mission.
- Consider hosting exclusive events or providing personalized recognition for your DAF donors to foster their connection to your organization.
- Feature professional advisors who encourage their clients to consider donor advised funds to maximize their financial, charitable and tax planning in your donor communications or as a speaker at a donor cultivation or stewardship event.
- Thank and report impact to donor advised fund donors the same as you would other major gift donors. Share compelling stories and regular updates on how their grants are making a difference.
During challenging times, fluctuations in the economy, high profile election seasons and natural or human-caused disasters when traditional giving may decline, it is important to remember that the charitable dollars in DAFs are already contributed, so these assets are not impacted by external forces like other sources philanthropic gifts can be.
For fundraisers, DAFs offer a significant opportunity to cultivate long-term relationships with donors and secure both current and future support. Include DAFs when you are talking to your donors about planned gifts. Donor advised fund holders need to plan for the future use of the assets in their DAF as part of estate planning. According to a 2024 National Study on Donor Advised Funds, of the 90% of DAF holders with succession plans in place, 69% designated a successor advisor and 30% designed either a charity or the sponsoring organization as the beneficiary. That 30% represents a huge opportunity for smart fundraisers who are talking to their donors about the final use of their donor advised fund assets.
Talking to your donors, reminding them of the opportunity DAFs provide for them both as a current gift or a planned gift and the impact their giving has on your organization, that’s the not-so-secret way to tap into donor advised funds to support the important work of your nonprofit organization.