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Leveraging Donor Advised Funds

Posted: September 30th 2020

Most local nonprofits know the Community Foundation of Greater Fort Wayne for its competitive grantmaking that grants out around $2 million each year. Something organizations may not know is the Community Foundation holds around 165 Donor Advised Funds which have granted out $14.1 million over the last 5 years. A question we often receive is, “How can I tap into those donors with Donor Advised Funds?” We are here to answer that question, but first let’s start with the basics on how a DAF works.

What is a Donor Advised Fund (DAF)?

A Donor Advised Fund (DAF) is a philanthropic giving vehicle that is overseen by a charitable sponsor such as a Community Foundation or financial adviser. A DAF allows donors to establish and fund an account by making irrevocable, tax-deductible contributions to the charitable sponsor. Donors then recommend grants, over time from their fund, to further their philanthropy in the community. According to Fidelity Charitable’s 2020 giving report, 60% of DAF’s give unrestricted dollars to organizations! DAFs allow donors to be flexible in their giving, allowing them to give directly to an organization in a few clicks. Some other benefits of DAFs are the ability for the donor to remain anonymous and the simplicity of receiving one tax receipt for their year of giving. In short, Donor Advised Funds are Philanthropic Bank Accounts. DAFs are here to stay, so it is essential that nonprofits learn how to leverage those dollars.

How do we know if our donors have a Donor Advised Fund?

Many nonprofits receive grants from Donor Advised Funds and may not realize it. When you receive a check from the Community Foundation, it is key to read the accommodating letter and see where the funds have come from. A fund name or donor name is typically included unless they request to give anonymously. If you don’t know if a donor has a Donor Advised Fund, ask them. Asking your donors becomes easier once you have nurtured a strong relationship with them. Listen for clues. Sometimes donors will tell you they have a DAF and whether it is held at the Community Foundation or a commercial DAF (Fidelity, Schwab, Vanguard).

How do we keep track of which donors have a DAF?

If your donors tell you that they have a DAF, document this somewhere in your CRM or where you track donors and relationships. It is important if you receive a gift from a DAF that you document the correct name, most often these are people you already know. If the name is unfamiliar to you or difficult to identify, feel free to reach out to us at the Community Foundation. For example: Jane Doe may write you a check one year with her name on it. Next year Jane Doe may give you a gift from her DAF that is called the JD Family Fund, it is important to make note that these came from the same person.  This helps you when you are thanking those DAF donors and making sure you are referring to them correctly and acknowledging all of their gifts to you. You want to be an organization who knows how to handle gifts from DAFs appropriately.

We know our donors have a DAF, now what?

Build relationships with them! Stewarding these donors is key! These donors should be at the top of your list, the fact that they have a DAF means you know they are already charitably inclined. Donors who have a DAF can give to your organization in just a few clicks through our online donor portal. 71% of DAF donors are loyal according to the Fidelity Charitable 2018 Giving Report. DAF’s do not have a required payout annually, which is why you should continue to build relationships with these donors, thank them and take them along with you as valued members of your organization. Consider updating them on the impact their specific gift has had on your organization and why you value their partnership.

Should we solicit DAF donors differently?

Consider adding messaging to your materials that remind donors that you are a 501c3 and can receive gifts from DAFs. It may seem obvious to those of us in the nonprofit sector, however, it’s always good to remind donors and help them make the connection.

Did you know DAF holders can leave you as a beneficiary of their fund?

If you have a loyal donor with a DAF, ask them to leave a portion of their fund to you upon their passing.  There are a many ways to facilitate this type of gift so that the donor can continue to support you long term and achieve their goals of supporting other organizations they love as well. If you need help navigating this type of conversation, we are here to help! The more tools you have, the better your chances are of securing a gift.

How can we get in front of your donors that hold DAFs?

This is a tricky question, but one we get asked a lot.  Keep us informed! The more we know about what you are working on, the better we can keep our fund holders involved and updated. Our fund holders trust us to connect them with opportunities that they care about, so the more you keep us in the loop the better!

In short, Donor Advised Funds are not a complicated new strategy, they are simply a giving tool that donors use to support organizations they love. Being familiar with DAFs is a great way for you to connect with donors in new ways. Remember, there are opportunities for you to secure ongoing funding from these donors by asking the right questions. Gifts from DAFs are 2 times larger than the size of gifts from other giving vehicles and they are here to stay. Let us know if you have questions as we are here to help philanthropy grow and make our community a better place to live, work and play!

For questions about how you can leverage Donor Advised Funds, contact Kiley Tate-Potts!

ktatepotts@cfgfw.org

260-969-3113


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