You shouldn’t need much encouragement, or any, to incorporate DAFs into your fundraising mix. But Matt Nash brings the encouraging stats. Then he explains how to overcome challenges, like anonymous donors; strategies for marketing and promotion; and tips on converting from transactional to relational fundraising. He’s from The Blackbaud Giving Fund.
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Welcome to Tony Martignetti Nonprofit Radio, big nonprofit ideas for the other 95%. I’m your aptly named host and the podfather of your favorite hebdominal podcast. Oh, I’m glad you’re with us. I’d be thrown into fusospirolosis if I had to chew on the idea that you missed this week’s show. Here’s our associate producer Kate to tell us what’s going on. Hey Tony, I’m on it. Donor advised fund fundraising. You shouldn’t need much encouragement or any to incorporate das into your fundraising mix, but Matt Nash brings the encouraging stats. Then he explains how to overcome challenges like anonymous donors, strategies for marketing and promotion, and tips on converting from transactional to relational fundraising. He’s from the Black Bod Giving Fund on Tony’s Take 2. Keep contacting your senators. Here is donor advised fund fundraising. It’s a pleasure to welcome Matt Nash to the show. Matt is the executive director of the Black Bar Giving Fund, a donor advised fund sponsor. He’s an expert in donor advised funds and philanthropy. An experienced executive with a focus on customer relationships. He previously served as senior vice president of marketing and donor experience at Fidelity Charitable. You’ll find Matt on LinkedIn, and the fund is at Blackbaudgivingfund.org. Welcome, Matt Nash. Well, thank you, Tony. Glad to be here. Uh, and I’m glad you are. Donor advise funds, we’re gonna spend the time talking about the their value, uh, why we should be paying attention, uh, over help us overcome some of the challenges that small and mid-size nonprofits face. Those are our listeners, all in small and mid-size nonprofits, um, in case folks are not. Paying enough attention, uh, maybe there’s some. Uh, statistics or other reasons you can share for, uh, being optimistic, being, uh, being proactive about. Encouraging donor advised fund gifts from your, from your donors. Yeah, sure. I mean, uh, you know, I, I think that the small and mid-size nonprofits is a great opportunity for donor advised funds and because, you know, the donors that use it are basically straight, good old fashioned donors. They, they want to support the causes that are important to them and it’s not just the, the large uh organizations that they support. They support the local, you know, charities that they, they want to support in their community. And, uh, you know, just a couple of statistics just to give people a background about what we’re dealing with here is that right now there’s about $250 billion in funds and sitting and donor advised funds to be being able to be used for any charitable purpose. In fact, that’s the only place that could be used is for charitable purposes. And about, you know, in a year, about $55 billion of that is granted out to nonprofit. Um, and so you’ve got, and there’s about 1.8, maybe almost 2 million people that have these donor advised funds, uh, accounts at this point. It’s not a lot of people, but it’s, it’s a fair amount of money because they’re, they’re very intentional in their giving and we can talk a lot more about, you know, what, what the mindset of these donors are, but I think they’re great opportunities for the small and mid-size no advantage of these. And also, uh, donor advised fund donors tend to be very generous. In in other giving to the, to the charity that they, they might support through their donor advised fund, there’s this 2024 study from. K2D and Chariot, something like 96% of people who give to a charity through their donor advised fund, not something like 96%, uh, increase their annual giving to that same charity. I mean that’s remarkable. That’s nearly 100%. Yes, yes, exactly, right, and the you know the reason for it from my perspective is that the, the, the value of these funds is that it I call it for intentional giving. And what I mean, what I mean by that is that, you know, a donor has to think about, OK, I wanna set up an account that’s for charitable giving, so they’re predisposed to, to giving the charities to begin with, right? And then what they do is they’ll, they’ll have they’ll move assets into that fund. It’s can come from cash, much of it comes from appreciated assets of some sort, stock, bonds, those kinds of things that, that raise in in value, and when they donate them to the, to the, the, the, the uh donor buys fund sponsor, it’s basically. A charitable contribution at that point, and the full value of what they’re donating is, is recorded as the uh the donation. And so they don’t have to pay taxes on the selling the assets before they get into the fund. They donate to the fund. The fund turns them into the cash that the uh nonprofits can receive. So it, it adds to sort of Amplifies the amount that they bring in because they’re bringing in assets that, that, uh, would be more difficult to turn into charitable purposes. And, and then they’re now they’re looking for what are my favorite charities and I can and as an individual, I have one of these things. I think about who, who’s really important to me, and I have funds available to give them at any point in the year. Now, a lot of the donor advised fund sponsors. Uh, and, and the biggest ones, uh, it’s a simple Google, uh, Fidelity, uh, then is going down the top five. Fidelity, Schwab, National Philanthropic Trust, Vanguard, and American Endowment Foundation. So those are the largest that either, either at least 3 of those are commercial, but then, then there are many others that are, uh, community foundations, many, many others. I think I, I, I saw that uh there are more. Charitable donor advised fund. Uh, sponsors than there are commercial. Oh, by far, by far, I think there’s like 11,000 donor advised fund sponsors in the country. And many of them, as you said, are, are community foundations. So community foundation is, you can, you can donate to the foundation and they’ll have, you know, different things that they uh support, different funds that they support, but they’ll also give you as a donor a chance to uh move funds to wherever you would want and you just, you have, you hold their, the donor advise fund at that uh uh at that institution. And then sometimes you can have uh a single use uh donor advised funds like the Jewish Communal Foundation is a is a classic example of that a very large donorvis fund sponsor has been around for years and years and years. And then even some colleges, universities will set up a specific donor advice fund for, for the donors that are supporting the school, but then those can also be used to do other donations to other charities too. Yeah, doesn’t that have to be a part of it? I mean, you can’t, can, can, can the sponsor restrict? The, the, the ultimate donations out to the charities. So if you’re saying Jewish Communal Fund does for instance. I don’t know what the Jewish Communal Fund does in terms of what their policies are, but it is very typical for a university, for instance, to set up one and say, hey, you know, some experts. 50% of the donations that you’re sending out would need to go to something to do with the school. Um, you know, they have that option to do that. Many of that, many donor advised funds are, are totally broad, you know, like the Black B Giving Fund we’ll give to any charity as long as it’s in good standing with the IRS. Um, and, um, yeah, so Blackboard giving fund, uh, not in the top 5, but still, you know, substantial. You’ve got a couple billion dollars there, don’t you? We send out about $500 million a year to about 130,000 charities. So I, you know, I consider that to be in the. That’s very respectable, yeah. It’s hard to, you know, it’s hard to compete with Fidelity and Schwab, but we use, you know, default investment firm names, so, um, that obviously market heavily to people who have other kinds of accounts and, you know, so they, they promote their own products, um, but no, that’s very respectable, of course, yeah, um, and you know, we encourage folks to, you know, the. Uh, Matt, you and I were talking off mic, but we’re both in North Carolina. Uh, I found the North Carolina Community Foundation. Has a donor advised fund and you said the, the Triangle Community Foundation. So even as critical as the, the Triangle communities in in the Chapel Hill area in North Carolina. So it’s not only, you know, the San Francisco, or no, Silicon Valley people, well, probably San Francisco too, but people think of the Silicon Valley Community Foundation and the New York Community Trust, you know, these are huge ones in the. In the nonprofit, on the nonprofit sponsor side, but they’re not, they’re not, you don’t have, they don’t have to be the hugest ones. No, no. And so if you’re a charity in, you know, middle America, you know, there’s, there’s going to be donor buys from sponsor organizations in your area for sure. Uh, and you can look it up on Google and you’ll be able to find. You know, what local areas, uh, or what local sponsors are, are available to you and, and many of them will be the local community foundations in the cities and towns that are near you. And, and the reason that’s relevant is because for our listeners, you encourage them to reach out to the smaller foundation, the, the smaller foundations that have community trust. Um, what am I saying? The, yeah, the smaller foundations that have donor advised funds because they’ll, they’ll sometimes introduce. Donors to the. To the charity, if the, if the mission’s aligned, if your work aligns with what a donor was looking for, the, the smaller ones now Fidelity and Schwab, you know, the top 5, they’re not gonna do this. So, uh, there’s no point in going to Fidelity Schwab or Vanguard and saying, you know, here’s our charity. But, but if there’s something local like you’re saying, they’ll, it’s much more likely and a lot of cases they will make introductions to donors. Yeah, I would say there’s two reasons for why it’s important. The most important thing is that, you know, 50% of all giving is local. If you look across the country, across all donors, no matter what level of wealth they are, about half of their giving will be very, very local. So that’s, that’s an important point. Secondly, is that the uh a community foundation is designed to support the, the local community and they’re looking for and identifying important causes that will help the whole community develop. And they’ll often uh help their donors understand what kinds of, of nonprofits are operating in their area that are supporting some of these key, key causes. And so that’s the, the connection. But then as important is to know, OK, when I’m getting a donation, Is it coming through one of these? Donor advice from sponsors that’s local in my community because what I know then is there’s a community member who’s the donor behind that. And that’s the key is the, you eventually want to get to the, the connection point between a human being, a donor that’s trying to support you. They just happen to be using this donor advised fund vehicle as a way to to do that because there’s ways in which they can amplify their own giving and manage their own giving in a more simple manner using the donor advised fund and they just simply be either sending out checks or credit card donations to charities. Well, that leads us, leads me to think of one of the challenges of donor advised funds is that you, you, you. Uh, at least sometimes, maybe often you don’t know who the donor is. You get a check from the donor advised fund sponsor, whether it’s whatever Vanguard or a local community trust, community foundation, but they don’t identify the donor for you. What, what, what’s your advice around that? Yeah, well, it, it is an intermediary, and there’s many intermediaries these days with all the online giving and things that go, go on. And I think charities need to be better understanding of how these things work. So you mentioned that sometimes the donor is not known. There’s two reasons for that. One is, and this is a rare case, the donor will actually say, I want to be anonymous. And they’ll mark that on the on the donation form so that the whoever is now moving the funds to the charity is not allowed to tell a charity who it is. But the vast majority of it comes from the fact that all these donations are coming in by check, and they have a grant agreement attached to them, and it’s a manual process for entering the data into the database. And it’s easy to miss the important information on that those documents so that the nonprofit can tell, was it Tony Martinelli, Martintti who was giving the the funds? Was it Matt Nash, or was it somebody that’s anonymous? Oh, where do we look? So, all right, what are we, what are we not, uh, not doing sufficiently that we’re, we’re missing key, like buried information? What do we need to, well, I’ll, I’ll just tell you a personal example for myself, you know, I have about a dozen charities I support, and I’ve been every year I’ve been watching, you know, are they recognizing me in a proper way, knowing that I’m a Donor advise fund sponsor or donorvice fund donor. And when I donate, I donate through my Fidelity Charitable gift fund, right? I work for Fidelity. That’s why I use that you don’t use the fund is, uh, supports workplace giving programs and so my personal stuff. I do through, uh, oh, I see. OK. All right. And my, my fund is called the Matthew and Caro Ann Nash Cha Fund, right, so that comes into uh a a nonprofit. It says it’s from Fidelity. In fact, they are receiving the funds from Fidelity because it’s a, it’s a nonprofit that’s giving to this, this other nonprofit. But behind that is, you know, the you know the Matthew and Carolina Nash Charitable fund, that’s what it stated. And then I also, as a donor can tell them whether I would give them my, my name and address and contact information, and I, I, of course, do that. So all those pieces of information are on the form coming in. The key is making sure that the right information is got, gets to the right spot in your donor advisor or your donor uh CRM tools so that you can keep track of is it a Matthew Nash donation or is it somebody that’s anonymous. All right, you’re being more, you and Caroline are being more generous with, with your, with your name and your identity than a lot of donor advised fund donors are. So, and aside from the ones that are anonymous. And we’ll, we’ll talk about those because there could be a strategy for that too if it’s a small, if it again if it’s a smaller local community foundation, you might, you might have some leeway there but but we’ll uh, let me make a note we’ll, we’ll come back to that because I think a lot of people say anonymous, meaning they don’t want the charity to publicize their name but not meaning that they don’t want the charity to know who they are. So, we’ll come back to that because uh on the small. Small sponsor side, you could have some strategy there. Well, maybe, maybe in the larger too, you, you, you can tell me, but, but aside from that, uh, a lot of funds are not named, you know, Matt and Caroline Nash. Um, they, they, they might be, you know, Smith family or it might be something innocuous that doesn’t even have a last name. Uh, are you still, are you saying there’s still info that might be buried there for these not Uh, precisely named funds. Yeah it it does get more difficult if it’s not, if the name isn’t somewhere in the, the fund, right, in the fund name. Um, but you can, what I see is that If it’s not specifically labeled as anonymous. Then the charity should try to spend some time trying to figure it out, OK? So you, you get, you get these, these donations that come in. First thing you do is a simple scan. OK, what’s the name of the fund? Is the name of the fund got the name Nash in it? Do I have another Nash donor that, that comes in. If I’m in Wichita, Kansas, I got a donation from A Nash in Wichita I got a donation from this, you know, donor advised fund, uh, name with the, with the name Nash in it. Then you could reach out to that donor and say, hey, are you the same per you know, do you have a donor advice fun? Have you donated through donor advice fund? There’s, there’s ways to, to try to, you know, link the two together. Most people will say, yeah, that’s, you know, I, I’ve given you by. My credit card now shifted over to my donor advised fund or I give you a credit card when I can’t use the donor advised fund because there are certain circumstances where you, you can’t uh use a donor advised fund and uh and then the, the nonprofit can connect the two together and then manage the, the database and the stewardship activities according to that manner. Right. And that’s essential, the stewardship. You want to be able to say thank you. Now, you know, of course, there’s a possibility there’s more than one Nash. Uh, you can’t, you can’t link them up by by location, you know, necessarily, even, uh, you know. But you could reach out to the multiple Nashes that might be in your file. Some may be more active donors than others. So, you know, if, if donors have lapsed with that name, then they’d be less likely, they’re not impossible. I mean, they, they might have rejoined you, uh. But, or if they’ve been giving steadily and all of a sudden that individual donation stops, and you’re picking up another uh donor advised fund that might be the same from there on and it’s even bigger, then what they’ve done is they’ve shifted from credit card. Right, but, but you need to confirm, so you have to do some forensic work. You’re the people who are processing the gifts or, or you need to pass it on to a fundraiser who’s gonna reach out maybe to multiple donors to find out which is which this came from, or they need to do it themselves. Uh, but, you know, it, it, it’s worth doing because then you want, you want, of course, you want to be able to say thank you. It’s time for Tony’s Take two. Thank you, Kate. It’s still time to contact your US senators about this ugly, big bad burdensome budget bill that is now in the US Senate. Um, especially after last week’s blow up between Trump and Musk, that gave senators. A fair amount of cover to object to parts of the bill because Elon Musk did very publicly. He was talking about how it explodes the uh the federal uh deficit, which it does, but it, it, you know, it, it put a hole in the facade of unanimity around the bill so that gives senators some opening. So that gives you a chance to talk to them about how bad this bill is for the nonprofit community, for instance, uh, the individual attacks on Harvard University and Columbia University and the Corporation for Public Broadcasting and National Public Radio, we can’t allow individual attacks on members of the nonprofit community like those. Um, the taxing on large endowments, the taxing of foundation assets, right? So there’s taxes that are proposed to be imposed on our nonprofit community members. So, Contact your senators, remind them how important the nonprofit community is. You could add in some of your own work or some other local work that nonprofits do, but that the nonprofit community cannot be attacked through this budget bill. And there’s Urgency around this because there’s gonna be a vote. Well, they want to pass it by July 4th, uh, that seems to be optimistic, but it just don’t wait. Contact your senators. Stand up for the US nonprofit community because we are strongest when we are all together and we are in this all together. That is Tony’s take too. Kate Along with contacting your senators, make sure you also keep up with the news, not only unbiased news from America, but look at news from outside of our country, um, and see what others are saying about this matter. That’s actually good advice. Uh, you, you, it is valuable to get some outside perspectives. There’s a. There’s a, a French, uh, public radio station that I, that I see on watch on YouTube, there’s one from Germany as well. You’re right, it is, it is valuable to get an external. Non-US news. Uh, perspective, absolutely, yeah. We’ve got Beu but loads more time. Here’s the rest of donor advised fund, fundraising with Matt Nash. All right, let’s go to the, back to that case where it’s marked anonymous, as I said, I, a lot of donors say anonymous just because they don’t want the charity to use their name, not because they don’t want the charity to know who they are. So I’ve researched it, uh, see what you think. Is it, is it worth, what’s your opinion? Is it worth going back to the donor advised fund sponsor? And asking, can we learn who this person is just for our, for our own stewardship. If it is marked anonymous, then the sponsor must, you know, uphold that that request. I agree with you. There are a lot of times when it’s, it’s that nuance, right? I, I, I’m OK with you knowing I just don’t want the world to know, right? And, uh, and that’s, that’s really tough. So, um, what What I’ve seen nonprofits do is in their other communications that they have with their, their donors. Let’s say you’re sitting down with a, you know, a major gift owner or mid-level donor and you’re having a conversation with them, and, and the, the fundraiser then ask them, Hey, do you have a donor advice fund? Right, and are you using it? And then they would say, oh yeah, and here’s my, you know, here’s what I use. Well, I haven’t seen it in our, I’m not picking. It up in our database, so help me understand how you define it. And he goes, well, it’s anonymous, but here’s the, you know, here’s the fun number or the fun name or whatever. And, and they’ll, they’ll, you can get that connection between human beings, and you can, you can overcome that. I wish more places had it saying anonymous to the world but not to you as a, as an option. They, I don’t tend to find that has been a common. Uh, on the, on the forms that people have. Yeah, that is unfortunate because the technology could easily support that, you know, just inform the charity but tell them we want, we don’t want them to use our name, you know, right, um, what do you think about this strategy? Or tactic, whatever it is, um. You, you get something anonymous, you write a thank you letter. Like, dear, you know, just dear donor and convey that to the sponsor, asking them to send that on to. The donor. That happens. Yeah. And uh and the, the donor I fund sponsor will often then send it to the donor and saying, hey, this, you know, this person just wanted, doesn’t know who you are, right? It’s anonymous, but they just wanted us to know that they really appreciate the, the, uh, the gift and they would like to be able to pass that appreciation on to you. Um, that’s, that can be done. I’ve, we used to. Do it a Fidelity Charitable when, when specific requests would come in. Sometimes, you know, if, if you’re getting hundreds of thousands of these, it gets difficult, but, uh, you know, uh, particularly at the, you know, community foundation level, that’s a very common occurrence. OK, OK. So we don’t know if Fidelity is still doing that, but that’s the number one. So I would say if you get a donor advised fund gift and it’s anonymous. Check before you write the letter, because it’s gonna take time, uh, before you write the letter, check with the donor advise fund sponsor. Do they have a policy? Will they forward on something that you write? Will they pass it on to the donor? And if they will, then I, then it’s definitely worth doing because you’re at least getting the message through that you’d appreciate the donation and you can tell them a little bit about what you’re doing. You know, with the funds to make the world a better place and that, you know, that helps. I would also mention the reason we didn’t write to you directly is because you, you chose anonymity and, you know, we’re grateful to Schwab for doing this for us, but here’s why we didn’t send you, you know, why you didn’t get it earlier, why you didn’t get it immediately, you know, um, not, not that you’re blaming the person, but just explain. That’s why you didn’t hear from us sooner and why it’s in an indirect, indirect, uh thank you letter. All right. All right, so that’s OK, so there’s value in pursuing that, but check with the sponsor first. OK. Um, You mentioned something about the record keeping, you know, you said somebody may share with you the account number and the exact account name that hopefully your CRM preserves that so that next time, you know, and I don’t mean just like in an in an activity report, but you know, uh, somewhere that’s queryable. So that when next time you get a check from that person with that account number, you’ll be able to find it easily, you’ll be able to identify it. Yeah, so there’s this concept in the, in the CRM tools that they, they call it the hard credit and soft credit. And the hard credit is meant to be, you know, registering the donation that you have to be reporting for your, your, uh, you know, your tax reporting and then that 99 990. So when a donor advised fund gift comes in, the hard credit always goes to this plan sponsor, the donorvis fund sponsor. So it comes in from Schwab Charitable. Schwab Charitable is the, I guess it’s now the the 360. Uh, it, it comes in and, uh, and that’s, that gets the hard credit because that’s what you report to the IRS is saying I received a donation of, you know, $5,128 from, from, uh, Schwab. The soft credit is you and me. The soft credit is the actual donor behind it. And so it’s really important to identify the, the actual donor as, as well as you can that gets a soft credit and if there’s any contact information, then that allows you to start the steward process, stewardship process, or continue the stewardship process uh with that individual donor. And you don’t ever in either case, create a uh a tax receipt because The donor I fund sponsor that sent you the, the funds already has taken care of the, the fact that it’s, they, they’ve given the receipt to the donor when they receive the funds, right? So there’s no, there’s no uh charitable receipt required there. And the, the donor should receive an acknowledgement letter thanking them for it, but it should not be seen as, as being a charitable receipt because it’s illegal for the donor then to declaim both those deductions, the deduction that they got from sending it to the donor advisor. Fund sponsor and another deduction for the funds going to you, the charity. They get one deduction, and that’s when it goes to the donor advise fund. So that’s why it’s important for on the receiving end, the nonprofits need to make sure they’re clear with who’s got the hard credit and how do we account for that and how does that work in our reporting for our tax purposes for ourselves and then who gets the soft credit and that’s then it feeds into the stewardship process that you would be setting up with these donors. You, you mentioned, you know, that the donor gets their charitable deduction at the time they make the gift to the donor advised fund that’s sponsor, right? So that, that, that’s a, that’s a big advantage. You get a, you can get a lump sum charitable deduction, but choose the charities that you’re gonna distribute to or grant to, uh, over time, over, over years, over years and over many charities. So one large donation might feed. You know, 20 different charities over a five-year period. Now, that creates a problem, uh, a bit of a bottleneck that sometimes the Senate Finance Committee has, uh, uh, with Chuck Grassley has been, uh, try to been proactive about the, the problem being that there’s all this money, you said roughly $250 billion but it’s not getting out to the charities, it’s getting out at like $50 billion at a time. Which is not tiny, but that’s 1/5 of it, but that leaves 80% behind, you know, we, so, uh, I don’t, there’s not really a solution on a broad scale, well, at least not at our level. There may be in Congress that could force, you know, a minimum distribution the way we do with foundations, um, but nonprofits can encourage. Money getting out of their donors donor advice funds through. Donor advice funds promotion, right? Through through stewarding the donor, and creating relationships with them, helping them know what kind of impact you’re having, what programs you need to be funding, all those kinds of things that good nonprofits do in their fundraising all the time. I mean, you, you, you mentioned a problem, I, I, or a solution. The solution requires that there’s a problem on my mind and I, I’d argue that there’s not a problem here. You know, if, if, if, if 20% or 25% of the funds that come in every year get sent out that same year, that’s a, a pretty high turnover rate compared to other sorts of, uh, charitable organizations like foundations, for instance. They’re, they’re down closer to like the 5% rate, right? So you, you got a much higher churn, churn rate or whatever you want to call it with donor advised funds. The other thing that I think we need to take into account is that a donorvi fund tool allows a donor to bring in assets that they would normally not be able to convert easily into the, into the charitable funds, you know, appreciated securities, real estate. Businesses, all those kinds of things, and these donor advis from sponsors are set up to take those assets and translate them into a charitable contribution that can then be seen as cold hard cash coming to the, the nonprofit when it comes. That would be very hard to handle if you were a small. Nonprofit um receiving those complex assets. So I think there’s a big value that can happen with these donorvice fund sponsors that actually amplify the amount of funds that somebody can end up giving a charity over time. And then there’s the, it’s, it’s there ready to be used. And, you know, I, for instance, I can’t think of a better time than now, with a lot of these nonprofits who have been cut back with their federal funding, um, and they’re hurting big time. Uh, and that there is a body of, of funds that are probably not big enough to, to fill the hole because the government can always have much more money than than individuals. But there’s certainly a uh a place to tap into that the funds are there and are waiting with loyal donors that want you to survive and, and succeed. All right, well, we’re gonna have to sort of agree to disagree on that one because yeah, the, the funds are there, but they’re not, they’re only getting out the 20% rate and I I, I, I agree that that’s better than private foundations which have a, a minimum distribution of 5 requirement, federal requirement of uh 5% distribution per year, um. I, well, let’s see, you know, in this year, let’s see if more than 20% gets out from the donor advised funds. Um, the money is there. I would, I would just like to see it get out to the charities quicker. Um, and then another advantage for donors, we, we kind of touched on this a little bit, but I want to make it explicit is that, uh, a lot of the and maybe it’s just the commercial ones. You can correct me, maybe I’m wrong about that. The, the you, you contribute a, uh, to the donor advised fund sponsor, you’re, you’re giving appreciated assets that money can that those assets can remain invested. Now, maybe not in a, in, in real estate or a or a privately held company, but certainly in equities, stocks, stocks and bonds. And, and that appreciation grows tax free, which is an it becomes an advantage to the, to our nonprofit community. Absolutely, right. I mean, if, uh, you know, you, you bring in $10,000 and it’s invested over time and that $10,000 turns into $15,000 so you’re giving away $15,000. That, you know, that’s the amplified giving component of it, or at least one of the amplify giving components that’s a really critical component here. Matt, is that only at the commercial, uh, on the commercial, almost all, all that I. I know of has at least at the minimum pools of funds that are managed in like mutual funds kinds of programs. They’ll generally have a set of, of uh risk ranges available for people that either can be, you know, they can manage them to a lower risk level or a little bit higher risk level. Um, yeah, it’s, it’s a very common procedure to have those funds being managed and, and growing, uh, according to the market growth. OK, all right, so it’s right, it’s not just the commercial, the community foundations are doing that as well, because there’s firms that they can hire to do that, you know, a trust company can set it up, a bank can set them up. There’s even organizations that are, are set up to serve that marketplace to manage the assets on their behalf. Uh, on the promotion side, we’ve been talking about, you know, promoting this to folks who, who give through their donor advised fund, you know, encouraging them to do it again, but promotion should be even broader because they’re, you may very well have donors who have donor advised funds but don’t, don’t give to you that way. But there are advantages for them doing so. So, you know, don’t only promote donor advised fund gifts to your known donor advised fund owners, go broader and say, you know, if you have, Or have a donor advised fund, uh, you know, giving page or insert something into mailings that are maybe, you know, not devoted to donor advised funds but maybe a, you know, a, a slip inside if you have a donor advised fund, here’s our tax ID number and our legal name and our address. Yeah, I, I mean, this is the whole um the whole process. I think they, they people need to think about in terms of dealing with these donors. They’re coming in a slightly different way than you, than you may be used to, and you need to create. Uh, an experience for them that makes it known to them that you know that they’re donorvis for donor. And, and what, when you do that, it helps them be more appreciated. So, you know, the first thing is you need to remind them that they can give to you through a donor advice fund cause a lot of times they won’t be thinking about it. Right, right, what happens? You, the mailer comes out or it’s an email or or or something and, and the very first thing you see is credit card. And if it’s, if it’s just a reaction thing, the person just slips out the credit card and, and does it. But if there’s a, there’s a notice there saying, hey, if you have a donor advised fund, that’s really important too. We’d love to have you use that mechanism. And oh by the way, here’s our EIN. Number because that’s the number one thing you need to, to put in it in the whatever donor advised fund sponsor, you know, checkout process you’ve got, you need the EIN for the charity or at least the specific name of the charity, but the EIN is the only thing that’s specifically unique, um, and it would be important for the, the donor to know that, so to make it easy, right? So if I get a, a, a male or From a nonprofit and says, please, you know, support this campaign and we’d like, you know, minimum of $250 or whatever it is, and uh the check, the credit card information is there. They just say, if you’re using your donorvi fund, here’s the, here’s our EIN that you can put in your, your uh checkout. And that then that becomes just as easy for the donor to pull out their, their, uh, iPhone and call up the map and, and send them the money to the donor buys fund. It it it’s just this whole. Mentality inside the nonprofit to say, we need to understand how these donors operate and make sure that what we’re portraying to them is in sync with how they operate. You know, so that, so that it makes it easy and also then it also uh gets you to the point where you’re not asking to use the donor advised fund for places they can’t use it. So the classic examples, you know, the gala or the auction. Yeah, you can’t use a donor advise fund to buy uh the uh the ticket to the gala. Just an IRS rule, you know, you know, it’s just the way it is. You can’t use it to um bid on the, you know, the golf outing that’s, that’s in the uh in the auction because that’s a, a benefit that be receiving by giving the donation and, and you can’t receive a benefit from a donor advised fund donation because you got, you got a 100% charitable deduction. The donor got 100% when they put the money into the fund. So now you can’t use it to buy that’s athletic tickets. You can’t, you can’t get anything in, in exchange. Because you got a 100% deduction, and anybody who runs a gala knows that you have to, you have to notify the donor that $75 or $100 is not deductible because that’s the value of their, their, their dinner and their experience. So it has to be, uh, something that would be 100% deductible. So no, no exchange like you’re saying gala. Uh, auction items, the athletics, nothing that they get back in value. That’s correct. That’s correct. Now, if you’re at the auction and the, you know, the auction is wrapping up and the auctioneer is up there saying, OK, now what we’re gonna do is we’re just gonna do a, how, how many people will give us $100? How many people will give us $200? Well, you’re not getting anything from it, then that that auctioneer should say, and by the way. You can use your donor advise fund for this part of it, and the people running around the, the, the auditorium capturing your information, they’ll, they’ll just make sure that they’ll, uh, they’ll tag it toward the donorvi fund. That’s a legitimate way to use it, right? So that, so then as, as you’re the donor experiencing that event, you’re recognizing that they’re recognizing how you can use. Fill us in on the, the back end a little bit just to make this uh clear for listeners. How do, how do the donors Tell the donor advised fund sponsor they want to make a gift and, and here’s where it goes. Yeah, it’s, it’s very simple. Everybody has a website and almost all of them have an app. Um, so you call up the app, you, uh, you say, I want to make a grant, that’s the term that they that they use, and, uh, then it, it, it comes up and it says, well, who do you want to give to, and you can either say, you know, the um Raleigh Food Bank. And if the, if, if you put what you put in matches the uh name that they’ve got in their database that they’ve either that they’ve generally taken in from the IRS uh system or sometimes they’ll use like GuideStar uh uh record keeping. And so if that matches then up pops the That charity, it, it has the, the EIN showing. If you look at the EIN and it’s a different EIN number, then you, there’s a charity that’s very closely labeled to what you think, which is why I brought the EIN up as being the, the important thing. Anyway, you put that in, you say how much money do you want to give, and that can be. easily done either as a one time or you can do it as a recurring gift. So you can have some sustaining gifts going on through a donor advised fund and then you hit the button and it goes into a review process, of which if it’s a relatively small donation, you know, under $500. Likely goes straight through and it’s processed the next day. If it’s a large donation, there’s a team that will review the grant to make sure it meets the charitable requirements, then they’ll approve it, and then it goes to the charity. And then it’s either sent to the charity via ACH if the donor buys one sponsor has the banking information of the charity, or it’s sent by check. And in that review process, are they looking for anything, uh, is the sponsor looking for anything other than, is it a bona fide 501c3? Yeah, they would be looking at, is it a bona fide 5123, but that they normally keep track of that because that’s the part that they do with with the list that they carry. So when the, when you go in to check out, if you say, you know, my example, Raleigh Food Bank, I’ll put Pop the Raleigh Food Bank, that’s because it’s already a legitimate charity. But what they’re really looking for is, are, are there, is there any benefit that the Owners receiving from this donation. So they’ll read what was given to them saying, I want to donate 10 number of dollars for this purpose. And if the purpose is for general support of the of the charity, it goes straight through. If the purpose is, I attended a gala, they read what would happen there to see if there was any kind of a benefit that the donor received from it. That’s really the main reason for rejection. OK, you’re getting a benefit, right? You golf outing, you know, pay for the foursome, can’t do that. OK. All right, um, what else, what else do you want folks to know about donor advice funds, we haven’t talked about or maybe more detail on something. Well, I, I, I mentioned it at the beginning and I, and I would, I would really want to restate it because I think it’s, it’s important. I think that the nonprofits should always recognize these folks as, as in what I call intentional givers, right? They have chosen a, a vehicle to help them give and make it easier for them to give and to amplify their giving. That’s number one. Then they’ve chosen you. To give. So if the money came in through a donor advised fund, you’ve gone through two levels of of intentional decision making that really represents a donor that’s pretty serious about you as an organization. And I think that, that should be a really a, a great trigger for a nonprofit to say, wow, you know, Matt’s given us this money through the donorvis fund. He, he’s, he’s He’s serious about me. And so, let, I should think about how I can help him understand more about what we’re doing. I should help him understand about more about our mission, more about the, what we’re able to achieve, and more about what we could achieve if I had more. Because he’s got money set aside to give. And if I can help him understand that what we’re doing is really, uh, uh, you know, a a terrific. Service to the community or really matches what his, his intentions are for what, what he likes to, to um to support, then it’s likely that the giving from that person will go up. And so it’s that connection between the nonprofit and the donor, driven by the recognition of the intentionality that I think really starts this relationship. That then in the background, all the stuff that we just talked about in terms of how the money gets there and how much of it is, is, is spent uh for supporting all becomes just the mechanics. The real thing is the relationship, and that’s what nonprofit fundraisers are really good at it all along. So it’s, it, it’s providing for them a, a targeted donor base that they can turn into long-term steady supporters of their organization through the, the skills and and methods that they have been trying through fundraising lessons since you and I even got into this business. Yeah, it’s all the same work. It’s, it’s taking something that started as a transaction and converting it. To a relationship, right, right, yeah, and then that benefits both parties. All right. Are you OK if we leave it there? We are, yeah. Are you OK? I’m OK, but are you? I’m not. Are you, are you OK? I’m OK. Yes, yes, OK, I’m OK. This has been a great conversation. I, I hope that uh the, the folks out there are listening, got something out of it to help them become more effective because that’s, that’s really what we’re trying to do is my job is to get as much funds to the, the nonprofit sector and, and help these folks out as we can and the more they, they understand it, I think the better off we’ll all be. Amen. All right. Matt Nash, director, executive director of the Blackboard Giving Fund. You’ll find Matt on LinkedIn, and the fund is at blackboardgivingFund.org. Thank you very much, Matt. It’s a pleasure. My pleasure too, Tony. Thank you. Next week, let’s get back to our 25 NTC coverage with tech to amplify youth voices and donor diversity. If you missed any part of this week’s show, I’d beseech you. Find it at Tony Martignetti.com. Our creative producer is Claire Meyerhoff. I’m your associate producer Kate Martignetti. The show social media is by Susan Chavez. Mark Silverman is our web guy, and this music is by Scott Stein. Thank you for that affirmation, Scotty. Be with us next week for nonprofit Radio, big nonprofit ideas for the other 95%. Go out and be great.
2 thoughts on “Nonprofit Radio for June 16, 2025: Donor Advised Fund (DAF) Fundraising”
Thank YOU for listening, Jaana! I hope this episode helps you understand DAFs much better.
You have my best wishes for your work.
Tony
Thank you for taking up this topic! It’s always been a mystery to me how you these DAFs work.
Thank YOU for listening, Jaana! I hope this episode helps you understand DAFs much better.
You have my best wishes for your work.
Tony
Thank you for taking up this topic! It’s always been a mystery to me how you these DAFs work.