DOWNLOAD NEW WORKSHEET: Building a DAF Strategy

Donor-advised fund assets reached $327.9 billion in fiscal 2024, up 27.9 percent in a single year. Forty-two percent of millennial donors already give through one, a higher share than any generation before them.

Meanwhile most development plans mention DAFs exactly once, in the gift acceptance policy, as a payment method. That gap is going to cost organizations real money over the next decade, because the donors moving into these vehicles are not moving back out.

A workable DAF strategy has four parts. None of them requires new technology or a consultant, though we are happy to help.

1. Find out who is already giving this way

Run a report on gifts received from Fidelity Charitable, Schwab Charitable, Vanguard Charitable, the National Philanthropic Trust, and your local community foundation over the last three years.

For most organizations the total is larger than leadership expects, and the names attached to it are missing from every cultivation plan. The gift arrived from an institution, so the database recorded an institution, so the stewardship went to an institution that does not care about your mission.

Those donors are already yours. You have simply not been treating them that way, and they have noticed even if nobody said so.

2. Fix the acknowledgment problem

When a DAF gift arrives, the check comes from the sponsor and most systems thank the sponsor. The person who made the actual decision hears nothing at all. Some sponsors pass along donor contact details, some pass along a name only, and some pass along nothing. Most organizations have never checked which is which.

Call your three largest sponsors and ask exactly what donor information they release and how to request it. Then build a separate acknowledgment path for DAF gifts, with a human thank-you going to the advisor by name whenever a name is available.

This is unglamorous administrative work and it recovers relationships you are currently losing at the moment of transaction. A donor who gives $5,000 through Fidelity and receives nothing but a tax receipt from a custodian has learned something about your organization that you did not intend to teach.

3. Ask for the DAF gift explicitly

Add one line to your appeals. If you give through a donor-advised fund, you can recommend a grant to us at any time. That sentence does more work than it looks like, because a meaningful share of your donors do not know it applies to them.

Then add DAF instructions to your giving page with your full legal name and tax identification number visible on the page. The advisor filling out a grant recommendation form needs both, and an advisor who has to leave the form to hunt for your EIN is an advisor who may not come back to it.

Organizations that make these two changes see DAF gifts rise. Nobody was persuaded of anything. A small friction was removed at the exact moment of decision.

Also, make it easy for them to give you a heads-up about their intentions, so you can be sure to keep things on track from your end. This gives you a better chance at idfentifying their gifts even if the advisor/sponsor doesn't release that information. A simple form submission box on your DAF page is enough.

4. Talk about timing, since nobody else will

The structural problem with donor-advised funds is that the donor takes the tax deduction when money goes in and faces no deadline for when it comes out. The aggregate payout rate across DAFs was 25.2 percent in fiscal 2024, and community foundations came in at 22.3 percent. A great deal of money sits.

You cannot change that policy. You can change one conversation. When a DAF donor is genuinely engaged with your work, it is entirely reasonable to ask about a multi-year recommendation, or about pacing a larger commitment across three years, or about whether they have thought about what the account is for.

Most DAF donors have never been asked any of this. The ones who care about your mission tend to say yes, and the ones who do not have told you something useful.

Where to start

Run the report. That one step tells you whether this is a small housekeeping fix for your organization or a significant piece of your future revenue that has been arriving anonymously for years while nobody thanked anyone for it.

 

This post is the practical companion to Issue #6 of The Social Prophet, a power map of where philanthropic decision-making is moving over the next decade. Read it at thesocialprophet.org.

Common Ground Consulting works with nonprofit leaders on fundraising strategy and the funding models shifting under them. If you would like help building this out, please get in touch.