It is vital that nonprofits develop processes for both soliciting & processing DAF grants to take advantage of the incredible philanthropic support they provide.
In a recent study completed by the Indiana University Lilly Family School of Philanthropy entitled, Nonprofits and Donor Advised Funds: Perceptions and Potential Impacts, researchers found 70% of organizations surveyed had received a gift from a DAF. Even still, some charitable organizations had no strategy for encouraging gifts from DAFs or building relationships with DAF donors.
As cited in the study, grants from DAFs in 2018 totaled $23.4 billion, and in the years 2014-2018, the number of new DAF accounts tripled, and grants made by DAFs increased by 90%.
Grants from DAFs have exploded during the COVID-19 pandemic. The four largest commercial DAF organizations have reported 20-28 percent increases in grantmaking in the first months of 2020.
It is vital that nonprofits develop processes for both soliciting and processing DAF grants to take advantage of the incredible philanthropic support they provide. Some essential tips for nonprofits to keep in mind are as follows:
- Grants through donor advised funds are usually sent in the form of a check or a wire transfer. They should be processed the same as any grant to your organization; however, gift credit should be given to both the DAF sponsor and the donor.
- Donors who give charitably through a DAF receive their tax deduction through the DAF sponsoring organization (community foundation or commercial). Therefore, it is not necessary to send a thank you or receipt to the sponsoring organization.
- DAF donors may or may not wish to remain anonymous. If the latter, the DAF sponsoring organization should provide you with the donor’s name and mailing address so you may thank and cultivate the donor.
- It is an excellent idea to steward DAF donors. Send them reports on the benefits of their grants. If they wish to remain anonymous, ask the supporting organization to forward stewardship information to them.
- In brochures and other donor communication, make sure you mention that donors may make grants to your organization through their DAF.
While we continue to experience the impact of COVID-19 and look toward the end of the year, grantmaking from DAFs will be an important source of contributed income. Now is the time for nonprofits to be proactive in encouraging donors to make gifts from their DAFs. To access Nonprofits and Donor Advised Funds: Perceptions and Potential Impacts, visit: Scholarworks.iupui.edu
Your Philanthropic Partner
Vicki Pugh, CFRE, CAP®
Vice President for Philanthropic Giving