Demystifying DAFs: 5 Ways to Boost Donor Giving

Demystifying DAFs: 5 Ways to Boost Donor Giving

Are you tired of talking about DAFs yet? If so, we have some bad news for you. Now is not the time to stop! 

The Donor Advised Fund, as you’ve probably heard, is the fastest growing vehicle in charitable giving. But the donor-friendly funds haven’t reached market saturation yet. In fact, they just keep growing in popularity. And donors who use DAFs tend to be more generous in annual giving and planned giving 

It’s worth talking to your donors about DAFs in ways they can understand. According to Giving USA, only 19% of Americans know what a DAF is and how it works. That means 4 out of 5 Americans still don’t know about or understand them. It’s time to spread the news! 

DAFs are like Starbucks cash 

According to the Wall Street Journal, if Starbucks was a bank, it would be ranked the 385th largest bank in the U.S. Trusting customers hold their own cash in the Starbucks app like a secret coffee bank account. The company was holding over $2 billion of their customers’ cash in the fourth quarter of 2021.  

DAFs are like Starbucks cash. People add money to the fund (getting the tax deduction in the process) and then they have it ready when they want to give. The funds themselves just keep getting larger; the Institute for Policy Studies says “DAFs have seen such phenomenal growth that by 2020, six of the top ten recipients of charitable revenue in the country were DAF sponsors.”  

Five ways to get a piece of the DAF pie 

So how do you help your donors be more aware and, at the same time, encourage them to direct a portion of their funds to your nonprofit? 

1. First, get your details straight. Bigger DAF sponsors offer nonprofit options in their portals; these are usually collected from the IRS, and for details they may point donors to Charity Navigator or GuideStar. If you operate under a different name than is listed with the IRS, make sure your donors know what to look for. And make sure the nonprofit guides have up-to-date information on you. 

2. Add links on your giving page. If you know that your donors often use a particular DAF sponsor, like a community foundation or investment company, you can add links to your online giving page so that donors can go directly from your page to their fund. 

3. Be the one who helps your donor understand. Offer information on how DAFs work. And remember, the idea of any planned giving, including DAFs, needs to show up in all of your marketing so that donors get right message at the time they are ready to think about it.  

4. Recognize their gifts. If possible, thank your donors and invite them to get to know your organization better. In a recent webinar, our colleagues talked about “subscription philanthropy.” Here’s one way to apply it: you could create a benefit or a giving society specifically for those who give regularly through their DAFs. 

5. Inspire them to give — now. Inspiration is a vital piece of all planned giving marketing, but DAFs are a little unusual. The money is there, and as far as the IRS is concerned, it has already been given. But there’s a tendency among donors to hold on to the money, waiting for just the right moment or project. Give them a reason that the time is now. You could request gifts for something that has an immediate, time-limited need, or you could create a matched gift campaign. More than anything, help them see how important your work is, both now and in the future, so that they will want to be part of it. 

So keep talking about DAFs. We’ve heard a lot about them, but your donors may still be in the dark. Or they may have already put a substantial amount in their fund, and they are just waiting on the right moment to send it out. Either way, they need to hear from you! We can help.