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  • Writer's pictureDrew Schneider

DAFs 101: What Are They, Why Do They Matter & Who Uses Them?


What Is a DAF?


A donor advised fund (DAF) is a specialized financial account used for charitable giving. It allows individuals to make a charitable contribution, receive an immediate tax deduction and then make grants to 501(c)(3) organizations over time.


The money in a DAF can also grow tax free and be donated at any time in the future - there are no time limits or distribution requirements for DAFs today.


Anyone can set up a DAF - either through companies that provide banking services (Fidelity, Vanguard, Schwab, etc.), newer startups dedicated to DAFs (Daffy, Charityvest, Groundswell, etc.) or often through local community foundations.


There is currently $234 Billion sitting in DAF accounts ready to be donated - because they have to be.

 

Why Do DAFs Matter?


DAFs are massive, especially compared with other alternative forms of giving.

  • Annual DAF giving is now nearly $46 Billion.

  • DAF giving is now 7x larger than the Stock giving market.

  • DAF giving is now 652x larger than the Crypto giving market.

DAFs are the fastest growing vehicle in philanthropy.

  • DAF giving is growing 28% in both 2020 and 2021.

  • The number of DAF accounts has nearly tripled over the last four years.

DAF gifts are MUCH larger than other forms of giving.

  • The average donation from a DAF is nearly $5k.

DAFs are a reliable source of funding during economic uncertainty.

  • The money in DAF accounts has already been set aside for charity and can’t be withdrawn for other purposes, so people’s propensity to donate from a DAF is not as affected by financial pressure.

 

Who Uses DAFs?


Not just the ultra-wealthy.

Not only much older people.

More active and engaged donors.

  • People with DAFs are 63% more likely to donate.

  • People with DAFs contribute more than 11 grants per year, on average.

  • People with DAFs have 24x larger average donation size.

Expecting easy, digital process.

  • 40% of DAF donors at leading digital fundraising charity first donated with a credit card on their website. (According to private data shared from a global leader in online fundraising with Chariot.)

  • It's nearly universal that DAF donors also donate with credit card. (According to internal analysis of DAF holder feedback.)

  • 96% of DAF holders initiate their grants digitally.

 

What's The Issue With DAFs?


Without Chariot, DAF giving is far below its potential, high-value donors can have a poor experience & staff can be overburdened.


Without Chariot, DAF giving is disconnected from broader fundraising efforts.

  • DAF giving can’t happen at the point of inspiration - a link from a friend, an instagram ad or an event.

Without Chariot, DAF gifts, which are 24x as large, are less likely from new donors.

  • The most common reason to donate to a new org for a donation is because someone you know asks you.

  • However, there’s no way for a new donor to deploy DAF dollars through peer-to-peer platforms, in donation forms or at events where friends ask.

Without Chariot, it’s difficult to know who has a DAF & steward them accordingly.

  • New DAF donors typically give with a credit card first - leaving organizations in the dark as to who in their donor file has a DAF.

  • DAF gifts often arrive without clear identifying details and never with email contact information.

  • Even if a mailing address is included, thank you's are weeks delayed.

  • No one wants their highest potential donors to have a poor donor experience.

Without Chariot, DAF giving is a cumbersome process, which limits conversion.

  • The typical DAF giving process without Chariot takes 15 steps, over 3 minutes and multiple redirects to complete. (According to internal analysis of existing DAF donation processes.)

Without Chariot, managing DAF gifts requires considerable staff effort.

  • It can take weeks for checks to arrive at organizations, often without identifying details that create significant gift processing burden.

  • Fundraisers often have to follow up with major donors to make sure DAF grants are completed.

Without Chariot, efforts to engage donors will be structurally hampered.

  • The most effective way to increase DAF donations is to educate donors about DAFs and how to use them.

  • But it's significantly less effective when explaining the DAF process is complex and so much time & effort is required to actually complete DAF gifts.

Without Chariot, an organization could be left behind.

  • People follow the paths of least resistance and DAF donors will make more DAF donations where it’s easiest.


 

How Do You Find DAF Donors?


Finding DAF donors is really all about making it easier for DAF donors to find you.


1. Make it easier for donors to give with their DAF.

  • Otherwise they'll most likely give a much smaller gift with their credit card, or worse, not give.

2. Increase awareness that you're able to accept DAF gifts.

  • Market your capabilities to your donors and make the information prominent on your website & in communications.

3. Ask your donors about their DAFs.

  • Don't be afraid to ask your donors in a survey or directly in 1x1 conversations if they have a DAF set up.

4. Include DAF giving options wherever you acquire new donors.

  • In your donation forms, in your peer-to-peer fundraising pages and at live events - DAF giving needs to be everywhere.

5. Most importantly... get started with Chariot.




Want the full toolkit on Maximizing Donor-Advised Fund Giving?

We created a step-by-step guide for you to make the most of Chariot for your DAF Fundraising. This toolkit is inclusive of:


Getting Started with Chariot

  • We dive into setting up Chariot for maximum impact including best placement of the Chariot button on your website and other key tips.

Aligning Your Team

  • We help you ensure every part of your organization is on board with your DAF strategy from example meeting agendas with your staff and executives to exercises for your board.

Spreading the Word

  • We prepare you to effectively communicate your new digital DAF donation capabilities externally with talking points for 1x1 conversations, email templates, and social media post template downloads.

Letting Chariot Help

  • We can support your team whether you need design help on your website, trouble shooting, or marketing assistance.

Rev Up Your DAF Engine

  • We have some creative ways to accelerate your DAF giving that we can't wait to share with you.

Keep Moving Forward

  • We make sure you are set on a clear path forward with a checklist, calendar, goal sheet, and key takeaways.



Submit this form to receive the full toolkit:





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