And another thing about donor-advised funds…

MarketSmart characters
MarketSmart lightbulb icon

Greg Warner is CEO and Founder of MarketSmart, a revolutionary marketing software and services firm that helps nonprofits raise more for less. In 2012 Greg coined the phrase “Engagement Fundraising” to encapsulate his breakthrough fundraising formula for achieving extraordinary results. Using their own innovative strategies and technologies, MarketSmart helps fundraisers around the world zero in on the donors most ready to support their organizations and institutions with major and legacy gifts.

I know, I disagree with many others on this issue.
But the value proposition offered to donors by donor-advised funds is fair and good. It motivates lots of people to move money into DAFs. Then money gets distributed. In fact, on average, about 15% to 20% of DAF dollars get distributed each year (depending on who you ask). Meanwhile, foundations must adhere to the ‘payout rule’ which refers to the fact that, by law, private non-operating foundations must distribute five percent of the value of their net investment assets annually in the form of grants. I couldn’t find how much actually gets distributed when I Googled the topic.
So, are the DAF holding pens just making money off the generosity of donors?
Yes, but if the money wasn’t transferred to a DAF, they’d be making money off the savings and investments of those same customers. Probably more money! Remember, most DAF dollars were in a bank account or investment account prior to hitting the DAF account. Those dollars weren’t under people’s mattresses!
In other words, think of it this way… The DAF got the donor halfway there for you. They got the donor to move the money from an investment account to an account earmarked for charity.

Stop complaining and do your job!
I think it’s time for nonprofits to market ‘giving’ through DAFs better to their constituents!
If they put even 5% as much time into marketing DAF’s as they spend marketing 5k runs, galas and sending junk mail or spam, I bet their donors would ‘recommend’ DAF grants much more often.
Unhappy? Then do something about it!
Stop huffing and puffing… and stomping your feet. Take action. Here’s how: Click on this link to the donor-advised fund widget I created for the sector to use for free. Put this script on your site and you’ll get more DAF gifts.
Here are some marketing suggestions to help you get more DAF gifts too.
Here’s a podcast (rant) you might enjoy that will give you some other insights not provided here.
Sorry folks.
I just can’t subscribe to the whining and complaining. Let’s do something about it together. Then I bet more DAF grants will get recommended and everyone will be happy.


Related Posts:

>>Podcast: Engagement Fundraising: Donor-Advised Funds (Season 1, Episode 12)
>>Growth of Donor-Advised Funds

8 responses to “And another thing about donor-advised funds…”

  1. Adele says:

    I agree 100%! In addition to better awareness that our donor can (should) give from their DAFs, it should be a routine question as we get to know our donors better. “Do you have a donor-advised fund? What a great way to give to your favorite mission!” Why rely solely on the printed/electronic message?
    Thank you for beating this drum.

  2. Debbie says:

    “The DAF got the donor halfway there for you. They got the donor to move the money from an investment account to an account earmarked for charity”
    Great point, Greg. And a positive way to look at DAFs! Thanks for this.

  3. Carol Tatch says:

    Not only are DAFs a great philanthropic instrument, they are a way to help educate donors, especially ones new to giving and owning their wealth, about how their giving can elevate and sustain a social service or social justice interest. I have the joy of also helping donors create hybrid DAFs that allow others to participate, focus on a donor’s particular interest, and really gets wealth distributed back out to the communities that need it. As a foundation that focuses on redistributing wealth for social justice (yes, we use those words in our materials), DAFs have long been a way to “free the fruit.” The work of creating a donor-advised fund can be one of caring, joy, discovery, and love. Granting from DAFs is certainly one.

  4. Karen says:

    All great points. I will share with the NPs I consult with and feel DAF are a great revenue stream.

Leave a Reply

Your email address will not be published. Required fields are marked *

Get smarter with the SmartIdeas blog

Subscribe to our blog today and get actionable fundraising ideas delivered straight to your inbox!