Maximizing Your Nonprofit's Impact with Donor Advised Funds (DAF)

In today’s nonprofit world, diversifying your funding sources is crucial. One funding vehicle that's gaining popularity *but is definitely not new* is the Donor-Advised Fund (DAF).

If your nonprofit isn't tapping into this resource yet, it's time to start!

This blog will guide you through understanding DAFs, their benefits, and how your nonprofit can effectively engage with DAF donors.

Plus, we'll introduce how Double makes it easier than ever to accept DAFs through your website's checkout process.

Understanding Donor Advised Funds

The Basics

A Donor Advised Fund is a charitable investment account. Donors contribute assets to the fund, receive an immediate tax deduction, and then can give grants over time to their favorite nonprofits.

Growth and Popularity

DAFs are becoming increasingly popular. In recent years, DAF contributions have surged, with billions of dollars earmarked for charity.

According to the National Philanthropic Trust, the number of individual DAF accounts in the U.S. increased by 19.4% in 2020, reaching a total of 1,005,099. Additionally, DAF charitable assets totaled $159.83 billion, a 9.9% increase from the previous year.

The Benefits of DAFs for Nonprofits

Increased Funding Opportunities

DAFs are a reservoir of already-allocated charitable dollars. Donors who use DAFs are committed to giving and may distribute larger or more frequent gifts. This means a steady and potentially substantial source of funding for your nonprofit. In 2020, DAFs granted $34.67 billion to qualified charities, marking a 27% increase from the previous year.

Flexible and Diverse Contributions

One of the best things about DAFs is the variety of assets donors can contribute. Besides cash, donors can grant stocks, bonds, real estate, and other non-cash assets. This flexibility can lead to larger donations and fewer restrictions on the type of assets you can receive. Fidelity Charitable, Giving Report, states that 60% of contributions to DAFs in 2020 were non-cash assets.

Potential for Larger Gifts

Because DAFs allow donors to plan their giving strategically, they might be more inclined to give bigger gifts. Donors can grow their contributions tax-free within the DAF, which can lead to more substantial grants over time. Additionally, the ease of managing a DAF can encourage donors to consolidate their giving, leading to fewer, but larger, grants. Fidelity Charitable found that DAF donors recommend nearly twice as many grants as other donors, with a median DAF grant amount of $4,500 compared to $2,500 for non-DAF donors.

Engaging with DAF Donors

Understanding DAF Donor Motivations

DAF donors are strategic givers. They value efficiency, impact, and often want to remain involved in their charitable giving over time. Understanding these motivations helps you align your approach to attract and retain these donors. Many DAF donors are also interested in maximizing the tax benefits of their charitable contributions and prefer the simplicity and flexibility that DAFs offer.

Building Relationships

Building relationships with DAF donors is crucial. Regular, personalized communication is key. Keep them updated on how their contributions are making a difference. Share success stories, impact reports, and invite them to events. Consider creating a dedicated newsletter or annual report for DAF donors, showcasing the specific impact of their grants.

With segmentation and automation, you can even automatically send different emails to your supporters based on how much they donated!

Check out a few other ways that you can engage your donors here.

Recognition and Reporting

Properly acknowledging DAF gifts is essential. Even though the donor receives the tax deduction when contributing to the DAF, they still appreciate recognition from the nonprofits they support. Ask Dijy how you can use text messaging in your outreach strategy, or better yet - ringless voicemails!

Additionally, providing detailed impact reports keeps them engaged and encourages future donations.

Receiving and Managing DAF Grants

First, ensure your nonprofit is eligible to receive DAF grants by checking requirements. These might include being a 501(c)(3) organization and adhering to specific grant application guidelines.

If you are indeed a nonprofit and have 501(c)(3) status, there are tools out there that can help you accept DAFs.

Double makes receiving DAF contributions easier than ever with its user-friendly platform using and have partnered with DAFpay by Chariot to make this possible!

Here’s how it works: during the checkout process on your nonprofit’s website, donors can now sign into their DAF accounts directly through Double. This seamless integration allows donors to contribute via their DAFs without leaving your site.

Take a peak here:

Double handles the details, ensuring the donation is processed correctly and efficiently. This feature simplifies the giving process, making it more convenient for donors to support your nonprofit through their DAFs.

By integrating this option into your donation platform, you provide a streamlined and efficient way for donors to contribute, ultimately increasing the likelihood of receiving DAF grants.

Steps to Implement Double for DAF Contributions

1. Sign Up: Click here to sign up for Double (there is no monthly charge!)
2. Integration: Integrate Double into your website (it's a simple piece of code). The platform is designed to be user-friendly and easy to set up.
3. Donor Login: During the donation process, donors can log into their DAF accounts through the Double portal embedded on your site.
4. Donation Processing: Once logged in, donors can recommend a grant directly from their DAFs. Double ensures the funds are processed and transferred to your nonprofit accurately.
5. Acknowledgment and Compliance: Double promptly acknowledges receipt of the DAF donation. Plus, you can use any marketing automation to send out a personalized thank you email.

Using Double not only enhances the donor experience but also simplifies your nonprofit’s administrative process.

With a more efficient system in place, you can focus on what truly matters—making a difference with the funds you receive.

Strategies for Maximizing DAF Contributions 

Creating Targeted Campaigns

Develop campaigns specifically aimed at DAF donors. Highlight projects that align with common DAF donor interests, such as education, healthcare, or community development.

Showcase how these projects create lasting impact. Use storytelling to connect with donors on an emotional level, demonstrating the tangible benefits of their support.

Marketing and Outreach

Use various channels to reach potential DAF donors (emails, calls, ringless voicemails, texts). Craft compelling messages that resonate with their values and motivations. Highlight the flexibility and impact of giving through DAFs in your communications.

Consider hosting webinars or informational sessions on DAFs, inviting both existing and potential donors to learn about the benefits and impact of their giving.

Collaborating with Financial Advisors

Partnering with financial advisors who manage DAFs can increase your nonprofit’s visibility. Educate these advisors about your mission and impact, so they can recommend your organization to their clients.

Offer to provide informational materials or host joint events where financial advisors and their clients can learn about your nonprofit's work.

FAQs for DAFs

What is a Donor-Advised Fund (DAF)?

A DAF is a charitable investment account that donors can use to contribute various assets, receive an immediate tax deduction, and recommend grants to nonprofits.

Why are DAFs beneficial for nonprofits?

DAFs provide access to funds that are already allocated for charitable purposes, offer flexible and diverse contributions, and can lead to larger, more strategic donations.

How can my nonprofit attract DAF donors?

Understand your supporter's motivations, build strong relationships, provide thorough recognition and reporting, and highlight specific projects that align with their interests.

What is Double’s role in DAF contributions?

Double simplifies the process of accepting DAF contributions through your website’s checkout process, making it easier for donors to support your nonprofit.

In Conclusion...

Donor Advised Funds are a powerful tool for nonprofits looking to diversify and increase their funding sources. By understanding DAFs, building relationships with DAF donors, and using strategies to maximize contributions, your nonprofit can significantly boost its impact.

With Double now accepting DAFs, it’s easier than ever to incorporate these contributions into your fundraising strategy.

Start implementing these strategies today to attract and maximize DAF contributions, and watch your nonprofit’s impact grow!