It’s time for the nonprofit sector to stop whining about Donor Advised Funds

I’m getting really tired of hearing people complain about donor advised funds.

For instance, it was reported by the Chronicle of Philanthropy that dollars put into DAF’s grew by 300% in the past 6 years compared to just a 13% increase in charitable giving during the same period.

But here’s one thing that is terribly overlooked:

If the amount of money being contributed to DAF’s keeps growing but grants aren’t being recommended by the DAF owners, then maybe the nonprofit sector is to blame.

Stay with me on this. First, I think all of us can agree that it’s clear that people with money want to give it away. They prove the point because they keep moving their dollars to donor advised funds at record rates. Those dollars are no longer theirs. Of course, that’s why they get a tax benefit right away. They’ve given it away!

But, at the same time, they seem to shy away from making payout recommendations (grants) at the same pace. This drives the nonprofit sector batty.

So isn’t it time we ask ourselves, “Why won’t they make the recommendations? Why would they give their money away by parking it in DAF’s but fail to make recommendations that would move the dollars to charities?”

I think I know the answer: Because the charities have not done their part.

The nonprofit sector has failed to give the DAF owners good reasons to make the recommendations. They have failed to build trust. They have failed to provide DAF owners with impact reports. They have failed to say thank you. They have failed to recognize that any exchange of money occurs as a result of a value proposition. And, in this case, the value proposition being presented to DAF owners is clearly too weak to instigate grant recommendations.

The list of failings is endless.

Yet fundraisers and thought leaders in the sector just keep whining. I think it’s time for them to stop. I think it’s time for them to spend more time considering:

• how they can improve the value proposition for donors,
• how they can make donors feel good,
• how they can build trust,
• and how they can make recommending grants worthwhile.

I’ve written more about this here and here if you are interested.

Sorry for the rant.

But I really think it’s time for nonprofits to take responsibility for the fact that so many DAF owners simply don’t see the charities as worthy of the dollars. Once that changes, I’m sure the money will be moved.

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