How Charities Can Use DAFs to Their Advantage

There is one topic that charities continue to ask me about – Donor Advised Funds. They ask questions about DAFs when I’m on stage speaking to an audience. They ask questions about DAFs when I’m helping them with their non-cash gifts. The questions just keep on coming, SO, I thought I would share some DO’s and DON’Ts to guide charities as they engage with Donor Advised Funds.

First off, don’t spend your time trying to “get in front of” a DAF provider’s donors. It’s not going to happen. Think about it. If a charity came to you and asked you to convene a meeting where you came and gave your pitch to their donors, would you agree? No, you probably wouldn’t. It’s not that they don’t want you to know who their donors are. It’s because 99% of donors who create DAFs already know who they want to make grants to. If they want help, they will ask the provider’s expert staff to help them find charities doing the best work in a certain area.

That’s where you can spend some time. Make sure that your local community foundations know who you are and what you do. That way, when a donor does come to them and ask for help selecting a charity – they can bring your organization’s name into the conversation.

There are a few proactive things you can do to attract more grants from DAFs.

First, talk to your existing donors and ask if they already have a donor advised fund. If they say “yes”, you should be excited. This person is obviously intentional about charitable giving AND has set aside money that can only be used for charitable giving. I would treat them like a donor you just discovered has their own family foundation. It’s not that different.

Additionally, ask them “would you consider requesting a grant to our organization”. They may already be giving to your organization from their fund, but in an anonymous manner. This could be the conversation that prompts them to disclose that they are behind some of those mystery DAF checks your organization has received.

You could also consider asking them if someone close to them has a donor advised fund. They may not be in a position to establish a fund themselves, but a family member may. Imagine if one of your younger donors approaches her grandmother and asks, “Grandma, would you consider requesting a grant from your fund to XYZ charity?”. Do you think grandma is going to say no? Probably not. She’ll be thrilled to have a conversation about giving with her grandchild and more than happy to request that grant.

Second, let people know they can request grants to your organization. In your annual appeal letters, you probably have check boxes for Cash, Check, and Credit Card. What if you add an additional box for “Request Grant From My Donor Advised Fund”. It’s one more touch to remind the reader of that additional way to give.

Third, remember you’re not the only game in town. Most donors give to more than one charity. If they want to donate a valuable non-cash asset to charity, they may very well want to use it to benefit multiple organizations. Donor Advised Funds accomplish that perfectly. They can accept the asset, liquidate it, and then send the sales proceeds to the donor’s favorite charities. I advise you to start a close relationship with your local community foundations so that you understand their DAF policies. That way, when one of your donors wants to use a non-cash asset to benefit multiple charities, you can be the one to help make that happen. Introduce them to your friendly neighborhood community foundation and the concept of the Donor Advised Fund. The donor will be impressed with your ingenuity and preparedness.

Community Foundations can also be wonderful helpers when it comes to your organization’s fundraising. Many of them offer Endowment management, Charitable Gift Annuity and Charitable Trust management. Many also offer DAFs for charities! Yes, your charity can establish a fund at a community foundation to receive contributions to it directly from donors. You might consider doing this to receive non-cash gifts that you don’t feel comfortable accepting yourself. You may also consider doing this to take advantage of the high-quality investments they may have access to that you don’t.

Many people have little awareness of the vast service and support that their local community foundations provide for both donors and nonprofits. Explore these options. You’ll be glad you did.

I hope this article has helped you to understand Donor Advised Funds in more detail and has given you some ideas you can use right away to begin partnering with DAFs for your organization’s benefit.