While the official estimates vary by source, Americans currently have about $300 billion sitting in Donor Advised Fund (DAF) accounts. To put that amount in perspective, it is as much as GDP of the entire country of South Africa, could cover a Harvard education for 2.2 million students and is roughly equal to ALL THE MONEY given by individuals to charity in 2022 ($319.04 billion).
Think about that! Almost an entire additional year of individual philanthropic giving is sitting in these accounts. And the donors who established the DAFs have ALREADY received a charitable tax deduction – even though the money has not yet gone to work for a charitable purpose. Worse yet, there is NO REQUIREMENT for donors to issue the funds on any particular timeframe so charities could be waiting a long time for that money. And, in many cases, donors are earning interest on the money so the incentive to pay it out is reduced.
Let’s remember how we got here. A donor-advised fund, or DAF, is a giving account that allows donors to make a charitable contribution, receive an immediate tax deduction and then recommend grants from the fund over time. Following the sweeping Tax Cuts and Jobs Act of 2017, which eliminated charitable giving deductions for most taxpayers, DAFs were popularized as a way for donors to “bundle” their charitable dollars from a few years in order to meet the thresholds for a charitable deduction in that year.
The result of all these DAFs? On the plus side, there is a LOT of money that has been designated for charitable purposes. The downside is, the flow of that money from individuals to charitable works has been disrupted. But, as fundraisers, there is something we can do about it.
If we assume that most of the people who established DAFs are well-meaning people who still want to make a difference in the world (and I do assume that), then it’s up to charities to remind them that it’s not doing any good just sitting in their Vanguard or Fidelity account. You need to be ACTIVELY asking for these dollars because the average DAF grant is close to $5,000.
Here are five things you can do right now to get the word out to your donors that you want that DAF money:
- Include a mention of DAF gifts within the copy of ALL your fundraising solicitations and list it as a giving option on reply forms and landing pages.
- Identify the folks on your file who have already contributed through DAFs and customize your outreach to them. Consider automatically adding these donors to your mid-level donor track so they receive higher touch communications. And include a reply form that strongly urges them to direct another grant to your organization.
- Run ads and articles in your newsletters, magazines, and annual reports reminding donors to make a difference with their DAF dollars.
- Make sure you have DAF information in a prominent place on your website, so donors don’t have to click 10 times to find it. During the year-end fundraising season, you could even consider a banner across the top of your home page.
- Train all gift officers to introduce the DAF conversation when meeting with major and planned gift donors.
If you are not reminding your donors that you want those DAF dollars, other organizations will. So, make sure your donors know that YOUR charity accepts DAFs and tell them how much impact those dollars can have on your mission.
With year-end fundraising campaign planning underway now, this is the time to GO GET THAT DAF MONEY.