Arecent report published by the Indiana University Lilly Family School of Philathropy at IUPUI and funded by a grant from Schwab Charitable examines nonprofit organizations’ perceptions of donor-advised funds (DAFs) and how nonprofits solicit, manage and steward DAF gifts. The report includes recommendations for both nonprofits and
DAF sponsoring organizations to improve their collaboration in order to enhance and expand charitable giving.
Nonprofits and Donor-Advised Funds: Perceptions and Potential Impacts examines DAFs from the perspective of nonprofit organizations, based on results of a national survey of nonprof- its’ experiences over the past three years and in-depth nonprofit case study interviews. The report also features a spotlight on nonprofits’ experiences during the COVID-19 crisis and how DAF donors respond during times of crisis. A large majority of nonprofits have received gifts from DAFs in the past three years. While many nonprofits have processes in place for receiving these gifts and are encouraged about their potential, the study also suggests that there are gaps in nonprofits’ understanding of this form of charitable giving. Additionally, nonprof-its have concerns about DAFs’ impact on their interactions with donors. “This new study expands understanding of a rapidly growing form of charitable giving and provides valuable suggestions for both nonprofits and DAF sponsoring organizations, based on the latest research,” said Amir Pasic, Ph.D., the Eugene R. Tempel Dean of the Lilly Family School of Philanthropy. “This report can help strengthen the relationship between DAFs and nonprofits to benefit the people and communi-ties served by the philanthropic sector.”
Among the key findings:
- 70% of nonprofits surveyed received one or more gifts from a DAF in the past three years.
- Many nonprofits—especially those with revenue of less than $100,000—lack basic knowl-edge about what DAFs are and how they work.
- Nonprofits that received at least one DAF gift have more positive perceptions of DAFs and expressed fewer concerns about them than non-profits that had not received DAF gifts.
- 60% of all respondents, whether they received a DAF gift or not, indicated some level of concern about their ability to communicate with donors who give through a DAF.
- Nonprofits that explicitly solicited for DAF gifts—for example, by talking to donors about DAFs, talking to DAF sponsoring orga-nizations, or including information about giving through a DAF in fundraising communications—received DAF gifts at a higher rate (87%) than nonprofits in the survey that had not solicited for them.
- However, 42% of organizations that did not so licit DAF gifts also received them, suggesting that nonprofits may need to understand gifts made via DAFs and be prepared to accept and process them, whether or not they solicit such gifts. “Nonprofit organizations have some concerns about donor-advised funds, including that they may impact communication with the donor and disrupt the nonprofit relationship with the donor. However, nonprofits are encouraged about the possibility that they can engage donors with the nonprofit’s mission through DAFs, and nonprofits perceive that use of DAFs has led to larger gift sizes,” said Una Osili, Ph.D., associate dean for research and international programs at the school.
The report includes recommendations for DAF sponsoring organizations and nonprofit organizations. For example, DAF sponsoring organizations could offer educational opportunities such as webinars for donors and nonprofit organizations to help them better understand the benefits and limitations of DAFs. Similarly, non-profits might have opportunities to increase their receipt of DAF donations by communicating with their donors about giving from their DAFs. In addition to the national survey, six non-profit organizations were interviewed as case studies to provide a more detailed understand-ing of how nonprofits perceive and work with DAFs. The interview findings supported the survey results. Anecdotal evidence from the interviews suggests that some nonprofits may be seeing increases in revenue from individual giving that can be tied to receiving more and larger DAF gifts in recent years. Interviewees also highlighted concerns about their ability to communicate with their donors who give through DAFs. Information for this article was provided by the Indi-ana University Lilly Family School of Philanthropy.
