It’s easier than you might think to set up your own DAF to better understand what a rapidly growing segment of your donors use for their giving.
Donor Advised Funds are the fastest growing segment of Philanthropy, with over 3 million people holding over $230 billion in donor advised funds. In 2022, DAFs distributed $52 billion - a figure that has grown over 20% per year on average for the past 5 years (See all the latest DAF industry stats here).
As DAFs have grown exponentially over the past few years, it has left most nonprofit fundraisers with a lot of unanswered questions about them. How exactly do DAFs work? Why are so many people using DAFs? Why do they create so many internal headaches for nonprofits?
While there are ample articles on the Chariot blog that help answer some of these questions, nothing compares to actually experiencing a DAF firsthand - and it’s easier than you might think for a nonprofit fundraiser to set up and use a Donor Advised fund for their own charitable giving.
The Benefits of fundraisers using their own DAF
Because DAFs have historically been utilized primarily by ultra high net worth philanthropists, it might not have occurred to nonprofit fundraisers that a good way to learn about them is to use one themselves. But it is the best way to improve your DAF fundraising strategy - here’s why:
1. Deepened Understanding: By establishing and managing a DAF, a fundraiser can gain firsthand insight into its mechanics and functionalities. This hands-on experience fosters a deeper understanding of how DAFs operate and how they can effectively support charitable giving goals.
2. Feeling the pain points: Using your own DAF as a charitable savings account will also show you the pros and cons of using a DAF for giving. You will feel the frustration of not being able to use money you specifically set aside for giving on nonprofit donation forms (unless they have DAFpay enabled!)
3. Seeing where nonprofits frustrate DAF donors: The biggest issue with donating from a DAF is how rarely you get properly thanked in a timely manner. When you donate through your DAF portal, the organization won’t find out about the gift for weeks or months, and typically have little-to-no contact information. This delayed and manual process puts a lot of extra work on a nonprofit to try and steward DAF donors - so often they simply don’t.
DAFs are more accessible than ever before
The most common barrier to setting up and using a Donor Advised Fund historically has been that most DAF sponsors had high minimum contribution and minimum balance requirements. That meant that if you didn’t have 10s of thousands of dollars to contribute to philanthropy, it wasn’t an option for you.
Over the past few years, many providers have entered the market and others have evolved their offerings to be incredible accessible for a broader audience of nonprofit supporters. By introducing things like easy online account set up, mobile apps and no minimum accounts, providers have opened the door to millions of new DAF users in the past few years.
DAF options with no minimum requirements
Below we have highlighted 7 options for DAF accounts with no minimums, but there are over 1,000 DAF providers out there. If you’d like to explore and compare even more options, check out donoradivsedfunds.com for easy feature and cost comparisons.
1. Fidelity and Schwab: The two largest DAF providers, Fidelity Charitable and Schwab Charitable, offer DAFs with no minimum account balances and a minimum gift size of $50. While the setup process may involve manual paperwork, these platforms provide accessibility and flexibility for donors - especially if you already manage your personal finances with these companies.
2. Daffy: With easy onboarding and a mobile app interface, Daffy appeals to donors seeking simplicity and convenience. There are minimal monthly fees for contributions exceeding $100, its low entry barrier makes it an attractive option for those starting their philanthropic journey. Their minimum donation size is $18.
3. Charityvest: Charityvest offers a user-friendly platform with a minimum gift size of $20. While accounts are initially free, they do have small administrative fees once you’re investing those dollars.
4. Greater Horizons: While most community foundation DAFs have high minimums, Greater Horizons, part of the Greater Kansas City Community Foundation, actually has no minimum balances and no minimum gift size! They do have slightly higher admin fees for invested dollars (60-90bps).
5. National Christian Foundation: Many people like using a DAF aligned with their core values or beliefs - National Christian Foundation is a popular one that has no minimum balance & $100 min gift size. They do have higher administrative fees (1%+).
6. Orthodox Jewish Community Fund: Another religiously affiliated DAF with no minimums is OJC fund, and they even issue a card connected to your account to make giving even easier. They do charge fees on grants made, which is just a different model from most DAFs to be aware of.
7. EarthShare: Another cause-specific, no minimum DAF is EarthShare, which is focused on climate causes. They have an annual fee of $25 and take 2% of assets to fund the organization (they are also a nonprofit).
Conclusion
As Donor Advised Funds become an increasingly common tool for donors, it’s the perfect time for anyone working in the nonprofit sector to start using a DAF themselves! By immersing yourself in the experience and mindset of your supporters choosing to give this way, you’ll be able to better serve this critical audience and orient your organization’s strategy to bring even more DAF donors to your cause.