Maximizing Donor-Advised Fund Contributions: How Fundraisers Can Work with DAFs and Donors
Donor-Advised Funds (DAFs) are becoming an increasingly important part of the philanthropic landscape, accounting for nearly 10% of all charitable giving in 2022, according to Giving USA. With more than $52 billion in contributions, DAFs offer significant opportunities for nonprofit organizations, but many fundraisers are still trying to understand how to best work with these giving vehicles and the donors who use them. By implementing some key strategies, nonprofits can maximize their success in engaging DAF donors.
For a more detailed discussion of DAF’s, check out this “Around with Randall” podcast episode dedicated to this area.
Before fundraisers can fully tap into DAF contributions, it's essential to understand how DAFs work. DAFs allow donors to contribute assets, receive an immediate tax deduction, and recommend charitable grants over time. The flexibility and control offered by DAFs make them popular, but they can be misunderstood by charities due to the lack of required payout timelines.
One common misconception is that DAF donors are exclusively high-net-worth individuals. While DAFs are popular among wealthier donors, there's a growing trend toward democratization of these funds. Many DAFs now include smaller donors who contribute $25 to $50 per month, making it important for fundraisers to reach out to a wide variety of potential DAF supporters. On average, DAF gifts can range from $300 to $1,000, with major gifts significantly exceeding those amounts.
One of the first steps to securing DAF donations is ensuring that the process is simple and accessible for donors. This can be achieved by prominently featuring DAFs as a payment option on donation pages, right alongside traditional methods like credit card or bank transfers. Just as digital wallets like Apple Pay and Google Pay streamline giving, offering a DAF option directly on your donation page can eliminate the extra steps of having donors log into their DAF accounts and manually set up transfers.
Fundraisers need to be educated about DAFs to have meaningful conversations with donors about how these giving vehicles work. As giving grows increasingly complex, fundraisers should be prepared to explain the benefits and flexibility of DAFs to potential donors.
Organizations like Susan G. Komen have effectively incorporated DAFs into their fundraising strategy by educating donors through multiple channels, including their website, mailings, and events. By making DAF information easily accessible and routinely bringing it up in discussions with supporters, these organizations ensure donors are aware of all available giving options.
To increase DAF donations, nonprofits should mention DAFs in all giving campaigns. Whether it’s a year-end appeal, a GivingTuesday drive, or a major donor conversation, fundraisers should remind donors that DAFs are an option. Some nonprofits are even starting to run dedicated DAF campaigns, similar to how GivingTuesday mobilizes donors for a common cause.
DAF donors often give more than traditional donors. According to a report from Chariot, donors who switched from credit card or check donations to DAF giving increased their contributions by 96%. This means that promoting DAFs can encourage larger gifts, particularly from donors who are already familiar with your organization.
DAF donors tend to be more consistent in their giving, with retention rates 15% higher than those of traditional donors. By providing excellent stewardship and continually educating donors about their giving options, fundraisers can cultivate long-term relationships with DAF donors. Additionally, some DAF holders use their funds for planned giving, creating opportunities for organizations to secure future gifts that may last beyond the donor's lifetime.
As DAFs continue to grow in popularity and influence, fundraisers have a unique opportunity to engage donors who use these vehicles. By simplifying the giving process, educating donors, and incorporating DAFs into all campaigns, nonprofits can unlock the full potential of donor-advised funds. With some thoughtful strategies, fundraisers can build strong, lasting relationships with DAF donors and ensure consistent, impactful contributions for years to come.
