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Donor-advised funds (DAFs) are increasingly becoming the most popular charitable giving vehicles in the U.S., thanks to their ability to maximize both giving impact and tax benefits. According to the National Philanthropic Trust, contributions to DAFs at community foundations grew 20.2% from 2017–2021. Additionally, a 2023 FreeWill report shows that nonprofit organizations with a DAF strategy raised 2x more than those without one. What’s more, total DAF contributions in 2021 hit a whopping $14.56 billion — that’s a 48.4% increase from $9.7 billion the previous year.
So, what are DAFs? In this episode, Vicky Kelberer from Vanguard Charitable, a leading provider of donor-advised funds, joined the show to provide a download on DAFs, plus six easy steps nonprofits can take to jumpstart their DAF fundraising strategies.
What Are DAFs?
Donor-advised funds are like charitable savings or investment accounts. Donors (which can encompass individuals, groups, corporations, or private foundations) open a DAF account and add assets to it. These assets can be cash or non-cash. The contribution is tax-deductible, and the investments grow tax-free.
The donor decides which charity receives the account funds, known as a grant, and when the funds are released. A provider such as Vanguard Charitable then cuts a check to the nonprofit.
DAF providers handle all the logistics surrounding the gift, such as liquidating non-cash assets. It then invests those assets in tax-free, high-quality, low-cost investments, so the funds start growing as quickly as possible. This increases the impact of that gift over time.
Why Donors Give Through DAFs
There are now more than $1 million DAFs in the U.S., making it one of the fastest-growing giving vehicles — particularly among millennials and Gen Z. DAF donors come from every part of American society, and their reasons for giving in this way are as diverse as the donors themselves. However, Vicky sees three themes as the core reasons people choose DAFs:
6 Steps for Starting a DAF Fundraising Strategy
Through DAFs, donors can make a greater impact on the charities they love and support. So, nonprofits should make sure their donors know this is an option. To jumpstart a DAF fundraising strategy, take these six steps:
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