You’ve read the headlines: individual giving via donor-advised funds increased dramatically in the last several years, and the growth has continued.

In 2021, Fidelity Charitable made more than $10 BILLION in donor-recommended grants! For context, this is a 13% increase from 2020 and a 41% increase since the start of the pandemic just over two years ago. What’s more, the number of DAF donors (meaning individuals who have previously established or newly created donor-advised funds) has tripled in the last 10 years.

The average directed donation from a donor-advised fund is $4,407, and a typical DAF account has a balance of approximately $25,000. And, if that weren’t enough, you’ve undoubtedly had multiple conversations about the elusive ‘younger’ donor – the typical DAF donor is between 40 and 60 years old.

In 2020, our curiosity to better understand how nonprofits manage these generous donors and what the donor experience on giving via these somewhat new giving vehicles led to the launch of the K2D Strategies Donor Advised Fund Secret Shopping Project.

We made 25 DAF gifts ranging from $100 to $1000 to locally, regionally, and nationally known organizations. Some of the groups were organizations to which we had previously given, and others were first-time gifts.

We asked ourselves a number of questions at the start of the project.

  • How easy (or hard) is it to make a gift via a donor advised fund?
  • Would organizations send a tailored acknowledgement noting the gift came via a DAF?
  • Would they include an additional ask?
  • How are organizations re-soliciting DAF donors? And more…

The findings were fascinating!

Making a DAF Donation

First, we observed (as is sometimes the case) that infrastructure and operational challenges get in the way of donor experience. We used Fidelity Charitable (the largest of the charitable giving account options) and were surprised at how many nonprofits don’t keep their information up to date with the various funds. In one case, a DAF gift was returned because it was sent to an outdated address. In another, the organization’s name was a holdover before a rebrand. Most organizations we directed gifts to did NOT receive those donations via EFT (an option that Fidelity offers to get the gift to the recipient within hours).

Further, most organizations were not using a DAF giving widget that makes it easy for donors to direct a DAF gift from the organization’s website. DAF Direct is the most common (and based on experience, easy to install on the website.)

Acknowledging DAF Donors

We were also surprised how long it took to receive a simple acknowledgment – nearly three months for a very large and very well-known nonprofit (we did, however, receive three appeals from this organization before receiving the acknowledgment). BUT, all but two of the acknowledgments clearly recognized that the gift was a DAF (important for several reasons, including that DAF-directed gifts are not tax deductible!).

Resolicitation Strategy

While most organizations DID re-solicit us for an additional gift, none made a clear ask in the first mail solicitation to direct an additional gift from their DAF. However, we got a few phone calls with a request to schedule an additional gift.

We received several annual reports or newsletters that demonstrated impact, and in many (but not all) cases, additional communication had higher production values (usually nicer stock and closed-face envelopes).

Key Takeaways

Work with your operations, IT, and finance teams to ensure the back end is set up correctly and is donor-centric!

Thank before you bank. This mantra of the major gifts world isn’t happening in most cases for DAF donors. It needs to be fixed.

Please don’t be shy in making a compelling case to request an additional gift from your DAF donors. 75% of DAF gifts are repeat designations from the same account. Your clear and personalized ask is likely to get a positive response!

DAF donors are a bit of a different animal than a traditional direct response donor. But, given what we know about DAF dollars that are already in DAF accounts, they are well worth the time and energy to develop a DAF strategy.

Interested in learning more about the secret shopper study and hearing a case study for some of what we discussed here? Drop us a line, and let’s chat! Email Karin at kkirchoff@K2DStrategies.com.