Donor Advised Funds (DAFs) have become one of the fastest-growing philanthropic tools in Canada. With billions of dollars invested in DAFs willing to be granted, charities need to proactively engage donors who use these funds. Unlike traditional donations, DAF gifts require strategic outreach and cultivation. That’s why understanding how charities can maximize DAF gifts is essential for organizations looking to tap into this growing funding source. Although a magic formula doesn’t exist. Here are some ideas on how your charity can connect with DAF donors and make the most of this opportunity.
Understand How DAFs Work
Before engaging DAF donors, your charity must understand how these funds function. A DAF is a charitable giving account that allows donors to contribute assets, receive an immediate tax deduction, and recommend grants to charities over time. To gain a broader understanding, check out our more in-depth post Here. The funds are managed by financial institutions, community foundations, and other sponsoring organizations.
Key takeaway: DAF holders may give directly from their fund like a personal charity bank account. To do so, they recommend a grant through the DAF sponsor who will process their gifts to specific charities.
Make It Easy for Donors to Give from Their DAF
Many donors may not even realize they can use their DAF to support your organization. Simplify the process by:
- Adding a “Give from Your DAF” button on your website.
- Providing clear instructions on how to request a grant from their DAF sponsor.
- Listing major DAF sponsors (e.g., community foundations, financial institutions) on your donation page.
- Offering direct contact information for donors with questions about DAF giving.
Pro tip: Include sample language that donors can use when recommending a grant (e.g., “I would like to recommend a grant to [Your Charity Name], registered charity number [XXXXXX]”).
Build Strong Relationships with DAF Holders and Sponsors
Unlike traditional donations, DAF gifts often don’t include donor details unless the donor chooses to share them. To foster connections:
- Acknowledge grants promptly with personalized thank-you notes.
- If you don’t receive donor details, work with the DAF sponsor to send a thank-you message through them.
- Encourage donors to notify you when they recommend a grant so you can properly recognize their generosity.
Since DAFs allow donors to give consistently over time, stewardship is crucial. Regular engagement can turn one-time grants into recurring gifts.
Educate Donors About Unused DAF Funds
One challenge with DAFs is that funds may accumulate inadvertently. While donors receive immediate tax benefits upon contributing to a DAF, there’s no legal requirement for them to distribute the funds other than the policies of the DAF sponsor. Encourage donors to take action by:
- Highlighting urgent funding needs in your communications.
- Sharing success stories of how past DAF grants have made an impact.
- Encouraging donors to set up annual or recurring grants through their DAF sponsor. Donation by auto-pilot.
A simple reminder that “Your DAF gift can make an immediate impact today!” can prompt donors to act.
Final Thoughts
Donor Advised Funds represent a massive opportunity for charities. By making the giving process easy, building strong donor relationships, and working with financial advisors, your organization can tap into this growing pool of charitable funds. Understanding how charities can maximize DAF gifts is key to unlocking their full potential. With the right engagement strategy, your charity can turn DAF donors into lifelong supporters.
If you would like to learn about more details that charities can use to connect with DAF donors. Please contact us and we can connect you with experts in this field who can provide valuable guidance.
