Donor-advised funds (DAFs) have been a fast-growing giving vehicle for years, but they have grown faster in the wake of the COVID-19 pandemic and resulting recession. Experience shows that during economic downturns, philanthropic giving through DAFs remains strong.
The recession of 2020 was no exception: in fact, grants made to charities from donor-advised funds were up by 27% in 2020 as compared to 2019. According to the National Philanthropic Trust, this is the largest increase in DAF grant making in the past decade.
Whereas some donors may hesitate to give to charities during times of crisis, donors with a donor-advised fund have already invested that money into a DAF. Now, those funds are available and ready to be allocated in the form of grants to organizations.
Now more than ever, nonprofit organizations should not overlook grants from donor-advised funds. DAFs are a powerful potential source of grants, especially as many organizations rebound from crisis.
We recommend three steps that nonprofit leaders can take to make the most of grants from donor-advised funds, now and well after the end of the COVID-19 crisis:
1. Understand the essentials about donor-advised funds:
Donor-advised funds are one of the fastest-growing charitable giving vehicles in the US. Grants to nonprofits from DAFs amounted to $34.67 billion in 2020.
If your organization is not proactively maximizing DAF gifts, you risk missing out on revenue. The first step to receiving grants from donor-advised funds is educating yourself. Read the complete Grants Plus Guide to Donor-Advised Funds for a comprehensive understanding of what DAFs are and what your organization should do to maximize this growing source of support.
2. Connect with DAF donors that have supported your organization before:
Hopefully, you have already been spotting DAF gifts that you’ve received and appropriately soft crediting them in your database. Unless a DAF donor has explicitly requested that you not contact them, you should include them in your donor communications plan and steward them as you do other major donors.
Now is an important moment to share a personalized update. Gather a list of donors who’ve given to your organization through DAFs in the past few years. Create a letter that explains how the crisis has impacted or influenced your programming, operations, staff, and the clients, students, or audiences you serve. Express how grateful you are for their previous support and how much you need and would appreciate additional support now. Donors want to help, so give them the opportunity to do so by directing an emergency grant through their donor-advised fund.
3. Seek to make inroads to new DAF donors:
Not sure how to begin receiving grants from donor-advised funds? Begin by making a meaningful connection at your local community foundation. Many community foundations employ donor services officers whose purpose is to assist donors in making grants from donor-advised funds. Donors often look to the donor services officer to recommend organizations that match to their giving interests.
That means it can be worthwhile to introduce your organization to the donor services officer at your local community foundation. Request a brief introductory meeting, where you should be prepared to succinctly explain your organization’s mission and how your work is impacting the community. The donor services officer might even be willing to accept a brief (1 – 2 page) written summary that could be presented to DAF holders interested in your cause.
Want help navigating the DAF field and pursuing grants with confidence? Grants Plus is here to help. Contact us to request a complimentary troubleshooting conversation with one of our experts.
