How Donor-Advised Funds Can Help Clients’ Favorite Charities
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Clients who have donor-advised fund (DAF) accounts recommend grants to their favorite charities every year, and many are very involved with the organizations. They volunteer, serve on boards and committees, and are advocates for the non-profits.
Those organizations are in dire need of donations. The number of donors has decreased while the need has increased due to the pandemic and the economy. Fortunately, many DAF donors have stepped up and have been very generous, and the charities have been very thankful. In the past, some charities warily viewed DAF sponsors. But now that they have received numerous and significant grants from donors, more understand how DAFs are beneficial, especially in times like these.
Because donors want these organizations to succeed and survive, they and their advisors have inquired how their DAF sponsors can be helpful in their quest.
Donors and fundraisers understand that DAF sponsors cannot provide a list of their donors or recommend specific organizations, and they realize that nearly all donors know which causes and charities they wish to support before they even set up a DAF account. However, there are many steps that charities can implement that will result in additional or larger donations from their donors who have DAF accounts:
- State clearly on their websites that they accept contributions from all DAF sponsors (as well as from private foundations, bequests, appreciated stock, etc.). Most still just indicate on their donation pages that they accept credit card contributions and checks. A small number offer the DAF direct link to its three DAF sponsors, but fail to state that they can also receive grants from the many hundreds of other DAF sponsors.
- Analyze the contributions from their DAF donors. Numerous studies have shown that donors who have DAF accounts are more generous when recommending grants from their DAF accounts than those who write checks, donate by credit card, or even donate appreciated stock. This is largely because the assets in the DAF accounts can only be granted to charities, and they do not have to pull money out of their checking or investment accounts that can be used for other purposes.