September 18, 2023 by Nancy Rosenbaum
August 10, 2023 by Christal Cherry
Donor Advised Funds (DAF) have been in the news quite a bit recently. Since the pandemic began, the contributions to funds and the output of dollars from funds to organizations have both been breaking records. There is even a new movement spurred by philanthropists to encourage others to give more of their balances called “Half My DAF.”
Donor Advised Funds function a bit like a bank or brokerage account but the funds can only be used to support qualified nonprofit organizations. When a donor or family decides to create a DAF, they select a sponsorship organization (Vanguard, Schwab) and then transfer funds (cash, stock, etc.) into an account there. At this point they have made a tax-deductible donation to the sponsorship organization. Those funds no longer legally belong to the donor. They receive a tax letter from the sponsoring organization, which is why your organization does not send one if you are a recipient of a grant.
From there the donor has access to make additional contributions to increase the size of their DAF account and to “recommend grants” to organizations they want to support. Typically within the sites of each sponsorship organization there are tools that help DAF account holders research organizations, review 990s, and discover organizations that connect with their philanthropic interests.
Since the start of the pandemic, DAF sponsorship organizations have increased their communications to donors to encourage distribution of funds since the increased need among organizations is quite apparent. Reports show that many donors have chosen to be very generous with their recommended grants in the last five months. And, thanks to stock market growth, the balance of these funds are also growing.
Public media organizations have received grants from DAFs but not in huge numbers. There are billions of dollars held in DAFs by sponsorship organizations such as Fidelity Charitable, National Philanthropic Trust and Schwab Charitable Trust, so it’s only natural that public media fundraisers should be thinking about how to tap into this source of philanthropic funds. Greater Public’s Donor Advised Fund Toolkit gives you everything you need to communicate this giving option to your donors.
It’s important to understand what DAFs are and are not in order to help donors support your mission using their funds.
DAFs are not like a typical grant, even though they use some of the same language. There is no formal request for support created and no application that the station completes and turns into Vanguard or Schwab. These are funds that are distributed by individuals and/or families and thus the donor relationships are personal between your organization and the donor(s).
There has been some chatter about how public media needs to get “access” to DAF or “get some of that outstanding money,” which may stem from thinking of DAF as a grant-making program rather than another way for individuals to make significant contributions to your organization.
When an individual makes a choice to distribute some of their DAF balance to your station, the thank-you you provide in response cultivates them for future participation. Because DAFs usually have a minimum balance to open an account of tens of thousands of dollars and a minimum distribution of $500, there is strong likelihood that these individuals have both high philanthropic intentions and wealth. Therefore they make good prospects for major and planned giving.
But you still need to do the work of creating a relationship and matching their interest to a program at your station then communicating effectively and gracefully. DAFs make it easier for the donor to designate money for their philanthropic priorities and give quickly to organizations. On our end, the work of fundraising is still the same: build solid relationships and create a compelling case for support.
So then the question of the day is: What do I need to do to help donors give their DAF money to my organization?
There are services you can subscribe to to place information about DAFs on your website, but they don’t provide much value to your prospective donor. The information their sponsorship company provided is likely much more useful to them.
What is helpful:
Read more tips in Greater Public’s Donor Advised Fund Toolkit. Donors may decide to make a grant after hearing a pitch on-air or seeing an email that grabs their attention, or grants may be made unprompted. But the majority of these gifts will happen because a fundraiser has made an ask and the method the donor chooses for that gift is a DAF.
Donors have the option to give completely anonymously or provide your organization with their details. If they’ve chosen to disclose their name and contact information, use it to thank them without delay and keep them in the loop just as you would someone who made a gift with a check.
There are literally billions of dollars waiting to be distributed from Donor Advised Funds. It will take planning, skill, and boldness for public media fundraisers to be a part of these gifts, and our missions to inform and inspire are well positioned to be attractive to donors. So be bold, and good luck!
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