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2 Big Reasons Why You Should Stop Complaining About DAFs
My position in the debate about whether donor advised funds are good or bad for charities is that:
1. Nonprofits must take some blame for not promoting “donor advised fund giving.”
Let’s face it, nonprofits don’t make it easy for wealthy donors to give. It’s downright impossible to find a link to a DAF widget on 99.9% of nonprofit websites. How can you complain about DAFs being only money warehouses when you don’t make it easy! Imagine if Amazon.com took the shopping cart off of the top right side of their site and then complained that people aren’t buying. Silly right? Sorry folks, nonprofits need to get with the program. Make it easy for wealthy donor to give and the money will move from the warehouses (the donor advised fund accounts) to your bank accounts. And then, finally, to where it is needed most in support of your mission.
2. The golden rule applies here. My golden rule… which is: He or she who has the gold, rules!
The donor has the right to direct their gifts (their gold) as they see fit. It’s their money. Not yours! And just because they have already received their tax deduction doesn’t mean that you can force them to give their money to you. It simply isn’t your money unless you engage with the donor, tell them what you will do with the money, ask for the money, and make it convenient for the donor to give the money to you. When I hear nonprofits demand that the money be moved immediately, I sense a tinge of entitlement. Bottom line: You should know your donors well enough to mark their record with a notation that states “has a DAF.” Then you should ask those donors to recommend your organization for a gift. If you don’t ask, you don’t get! After all, it IS the donor’s gold. And the donor, rules!
Last thing, I DO think a 5% mandate for transfers should be imposed on DAFs (same as foundations). I really don’t think that’s unreasonable.
What are your thoughts? Let the debate begin….
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Agreed, Greg. If a donor is engaged with your organization, appropriately stewarded and cultivated, and asked to give robustly, they will, and where their money is stowed (whether in a DAF or a foundation or in their brokerage account or bank account) doesn’t matter. In my experience, the complaints I hear mostly have to do with anonymous gifts and the fact that they can’t engage with Fidelity/Schwab, et al, to reach the donor. This just betrays a complete misunderstanding of how DAFs operate as well as well as the lack of engagements that organizations have with donors generally. Most gifts my org receives through DAFs are NOT anonymous, and we can steward and solicit the donor as we would any other donor. And if a donor wants to be anonymous, they want to be anonymous – that has nothing to do with the DAF. I am slightly agnostic on the 5% requirement, given that the average giving from a donor advised fund is significantly greater than that…
Great stuff Tracy. Thanks for adding to the conversation.
Greg,
I’m not sure I understand the big push for 5% distributions. Currently, DAFs are averaging around 16% annual distribution rates. There’s no abuse going on and more regulations just make donors more resistant. The DAF is technically a charity, the funds have already been “given”. Donors should be able to control what amount the ultimate charity gets, and when.
Yeah… Randy. I’m thinking maybe I’ll walk that backward. Thanks for your input.
Great topic Greg. I’m with Tracy, if you are properly stewarding your donors and have high engagement, shouldn’t make much difference. I treat DAF like the donor’s “check book” it shouldn’t change the solicitation process or relationship for major donors.
Agreed, Greg. If a donor is engaged with your organization, appropriately stewarded and cultivated, and asked to give robustly, they will, and where their money is stowed (whether in a DAF or a foundation or in their brokerage account or bank account) doesn’t matter. In my experience, the complaints I hear mostly have to do with anonymous gifts and the fact that they can’t engage with Fidelity/Schwab, et al, to reach the donor. This just betrays a complete misunderstanding of how DAFs operate as well as well as the lack of engagements that organizations have with donors generally. Most gifts my org receives through DAFs are NOT anonymous, and we can steward and solicit the donor as we would any other donor. And if a donor wants to be anonymous, they want to be anonymous – that has nothing to do with the DAF. I am slightly agnostic on the 5% requirement, given that the average giving from a donor advised fund is significantly greater than that…
Great stuff Tracy. Thanks for adding to the conversation.
Greg,
I’m not sure I understand the big push for 5% distributions. Currently, DAFs are averaging around 16% annual distribution rates. There’s no abuse going on and more regulations just make donors more resistant. The DAF is technically a charity, the funds have already been “given”. Donors should be able to control what amount the ultimate charity gets, and when.
Yeah… Randy. I’m thinking maybe I’ll walk that backward. Thanks for your input.
Great topic Greg. I’m with Tracy, if you are properly stewarding your donors and have high engagement, shouldn’t make much difference. I treat DAF like the donor’s “check book” it shouldn’t change the solicitation process or relationship for major donors.