Chariot joined key stakeholders across the Donor-Advised Fund industry - researchers, fund managers, nonprofit beneficiaries and technology providers - to chart a path for DAFs in the next year.
This month, Salo Serfati, Chariot Co-Founder & CEO, and Elon Packin, Chariot’s Head of Partnerships, joined hundreds of other philanthropy leaders in Clearwater, Florida for 3 days of educational sessions, collaboration and planning around the Donor-Advised Fund industry. Here are their top 10 takeaways:
Takeaway #1
Nonprofits need to continue leading the dialogue around the DAF industry
It was clear to everyone at the summit that nonprofits were the heart of the event and represent the change agents that everyone involved with DAFs wants to better support. Nonprofit leaders played a pivotal role in most panels & discussions at the event and it’s critical that we continue centering their perspective and input as we all work to make DAFs an increasingly effective vehicle for philanthropy. At the end of the day, every DAF provider’s mission is to empower nonprofits, chiefly by facilitating deeper connection between DAF donors and the causes they care about most.
Takeaway #2
The Great Wealth Transfer means DAF users will keep moving younger
One of the most powerful sessions from the summit was Wealth transfer and the next generation: Thoughts from leading programs. DAFs are working hard to prepare for a rapidly shifting demographic of users as unprecedented amounts of wealth pass from Baby Boomers to Gen X and millennial generations. These new DAF holders will be used to donating online and DAFs need to prepare to better support things like campaigns, social media fundraising, peer-to-peer events, etc.
Takeaway #3
DAF donors are not all created equal, but there are 3 typical personas nonprofits should think about
The session on DAF Data and Trends with Dan Heist and Danielle Vance-McMullen from the DAF Research Collaborative showcased how the vast majority of DAF donors fit into one of 3 categories: Tub, Tank or Tower.
“Tubs” tend to utilize a DAF account as an efficient and intentional way to manage their philanthropy. They habitually put assets into a DAF each year and tend to fully spend the balance every 1-2 years.
“Tanks” leverage DAFs for discrete, one-time wealth events where they put a large sum into the account and plan to grant out funds annually over a 2-10 year period.
“Towers” think of their DAF accounts as long-term vehicles for their family’s social impact, and structure their contributions, investments and grant strategy with a 10+ year time horizon.
Takeaway #4
Not all DAFs are created equal either
There are important nuances between commercial DAFs, managed by financial institutions, and community DAFs managed by community foundations. Historically, when donors were deciding where to open their DAF account, the biggest trade offs were comparing the ease of use and technological advancement of commercial DAFs with the personal touch and local impact of a community DAF. It was clear at the summit that both categories of DAFs are learning from each other to better meet donor needs - with new technologies improving the community DAF user experience and commercial DAFs focusing on how to more directly connect donors with their impact.
Takeaway #5
In an alphabet soup of philanthropic vehicles, DAFs are the best option for someone’s giving strategy
There are a lot of complicated giving vehicles out there like QCDs, CGAs, etc. The simplicity of DAFs makes them the ideal candidate to be the foundational instrument of anyone’s giving strategy. With their DAF as their base, a philanthropist can seamlessly manage all the elements of their philanthropy. Private foundations historically held this central role for philanthropists, but more and more are transitioning to DAFs instead. There’s a clear imperative for the industry to keep investing in the technology that makes all the experiences of using a DAF easier, from contributing to disbursing.
Takeaway #6
DAFs reduce burden on nonprofits of accepting noncash assets
Apart from DAFs simplifying the experience for a donor managing their philanthropy, they also make things much simpler for a nonprofit. It is usually costly and/or time consuming for a nonprofit to receive, process and document non-cash donations in the form of real estate, art, stock, crypto, etc.
When people donate those assets to their DAF, however, the fund can easily manage and liquidate those investments so that nonprofits only ever receive cash donations on the other side. The easier it becomes to move stock, art, crypto, etc to a DAF, the more people can increase their “giving power” and continue to move more money to philanthropy.
Takeaway #7
DAFs have an obligation to help move more funds to nonprofits
There was universal agreement at the summit that DAFs want to, and need to, hold themselves to high standards to address criticism that the vehicle can withhold funds from nonprofits. The clearest role they have is to design donor experiences that make them more active with their accounts. They also will be active participants, with nonprofits and other industry representatives, in any additional DAF legislation to make sure it’s achieving the ultimate shared goal of this industry: moving more money into high-impact nonprofits.
Takeaway #8
Workplace giving is an exciting new frontier to democratize DAFs
Morgan Stanley just announced that they’re leveraging new technology to power an employee DAF matching program across their company and partnering organizations. This type of technology for employer matching DAF contributions will not only let more people engage strategically with their philanthropy, it ultimately means more money flowing to charity more easily!
Takeaway #9
The DAF opportunity for nonprofits is in the Trillions, not Billions
Most nonprofits still don’t appreciate how huge this market will be for them in the near future. There’s an expected $84 Trillion that will be transferred to younger generations as part of the Great Wealth Transfer. $72 Trillion is earmarked for inheritance and $12 Trillion is pledged to charity - and a large portion of that charitable giving is likely to move through Donor-Advised Funds.
Takeaway #10
There’s tremendous energy around this rapidly growing & evolving part of philanthropy
The DAF Giving summit was absolutely buzzing with excitement around impact, innovation and education. There are incredibly talented people leading the DAF charge on all fronts and everyone there could feel the sensation of being at the forefront of a wave that’s starting to really pick up speed.
The summit also provided for some real quality time with nonprofit leaders, who are the reason everyone is working so hard to improve and expand the DAF market. Salo’s favorite moment was getting to jump into a Pickle Ball game with the Save the Children team and Elon’s biggest highlight was having lunch with the American Cancer Society’s SVP of Digital Products.