Nonstop Nonprofit NOW · 07.22.2020

July 22, 2020
3 minutes
Justin is Funraise's CEO, a co-founder, and a bad-ass, experienced nonprofit fundraiser. Like a true fundraiser-turned-founder, he breaks down the concepts behind Funraise's mission everywhere he can make nonprofits' voices heard.

Donor-Advised Funds: love them or hate them, they’re here to stay.

Instead of rolling your eyes, it's time to get into the game. The velocity at which DAFs are funding charities is increasing like a 🚀.

Here's what you need to know:

  • 📈 There are over 750,000 DAFs today seeded with over $120B (and growing) that must be given to charity. 
  • 😲 Although private foundations have 9X more assets compared to DAFs, DAFs make up over 42% of giving between the two.
  • 👏🏽 Have you heard about #HalfMyDAF? A fellow DAF account owner is challenging others to pledge half their funds in their DAF to charity by September 2020 and they will match up to $25K to each charity. 

You can't afford to have a passive strategy when it comes to DAF fundraising.

WHY? 

  • It is far more efficient to raise from DAFs than foundations. It won't take 9 months to get a "Yes" or "No". 
  • DAFs are giving nearly at the same velocity as private foundations. 
  • DAF owners aren't trying to build a team of people to manage the endowment, they are looking to give it all away.

Go get those DAFs!


Transcript
Hey, everyone, welcome back to Nonstop Nonprofit NOW. Today, I want to talk about donor advised funds, also known as DAFs. 

Basically, I want to tell you what they are, why they are important, and an opportunity for your nonprofit today to chase after, as there's a significant amount of matching dollars on the line. So let's dive into today's content. 

So let's start with what. What are donor-advised funds? Essentially, a donor-advised fund is an account that a donor could open up, think about if they have $5,000 to give, they're going to put it into an account where they're gonna get an immediate tax break. They can use that to invest all of the capital gains. All of the earnings are tax-free and the funds must go to charity. So it's a great way for donors to be able to grow their charitable giving, at no tax consequence. The problem for a lot of nonprofits is they don't get that money immediately. However, over the last three years, the amount of money in DAFs has grown from $20B to over $120B in the last three years. 

So let's talk about why DAFs are important and why it's important for your nonprofit to have a strategy around fundraising within this channel. So a lot of nonprofits are raising funds from private family foundations. And if you compare DAFs to family foundations, there's 728,000+ DAF accounts. So that's insane. Compared to about 80,000 private foundations. So there's 9x more DAFs than there are foundations. These 80,000 foundations assets are 9x larger though than a DAF. But if you looked at the total charitable giving, year over year, DAFs make up 43% of giving when compared to what private foundations give. So to give you real numbers, in 2018, DAFs contributed $23.42B to charity, while family foundations contributed about 30 billion. So you can see this is an important category for your nonprofit to invest in and build relationships with and understand who your donors currently have DAFs.

The last thing I want to talk about is a challenge called #HalfMyDAF. It's a couple from the Bay Area who are challenging DAF account holders to give away half of their DAF this year. Now, DAF's were originally established for rainy days for nonprofits. So if a nonprofit has a need and there was donors with, you know, well-funded DAFs, these individuals should be willing to give as much of that as possible because they've already received the tax break from that contribution. So many would argue that 2020 is that rainy day for nonprofits. It's been a crazy year. And so this couple is matching up to $1,400,000 In this challenging other DAF account holders to give half their DAF. So I want to encourage you to think about who in your donor file has given through a DAF. Reach out to them and have this conversation, share this challenge with them as they are matching up to $25,000 per DAF account, that takes this pledge. So this is a great opportunity to chase after. More links will be in the email to follow. But today, that is the show. I hope it was helpful. Thank you for tuning in. Stay safe and peace out!

Stay in the nonprofit loop.

Get weekly updates on tips, trends, and best practices to help power your nonprofit. #nonprofitz4lyfe