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Does your nonprofit have a strategy for cultivating the fastest-growing donor checkbook?

Donor-advised funds (DAFs) are becoming one of the most useful – and popular – tools in a donor’s toolbox.

This is because donors who use DAFs are seeking three main benefits: to receive an immediate tax break, to have time to make giving decisions and to let professionals grow the money and manage the gifts.

While DAFs have been around for a while, they’ve seen a surge in popularity as more people have discovered their benefits. You no longer have to be filthy rich to appreciate the ease of giving through a DAF: Some plans only require $5,000 to open an account.

This explains the extraordinary growth. A recent special report by Giving USA, The Data on Donor-Advised Funds: New Insights You Need to Know, revealed that DAFs grew at three times the rate of increase of total charitable giving in 2016.

And Fidelity Investment’s DAF – Fidelity Charitable – is now the second-largest grant maker in the nation, behind just the Bill & Melinda Gates Foundation. According to its 2018 giving report, Fidelity Charitable made one million donor-recommend grants worth $4.5 billion to 127,000 organizations in every state and across the globe. This is a 27% increase over 2016. The DAF took in $1 billion in new investments in the first quarter of 2018 alone.

Clearly, DAFs are just another checkbook – albeit a big one – from which donors are supporting the causes they love.

Is your nonprofit one of those causes?

Are you connecting with DAF administrators to ensure your mission is being considered for gifts?

As savings/investment vehicles for donors, DAFs are administered by sponsoring public nonprofits such as community foundations or the charitable arms of for-profit financial institutions (such as Fidelity, Charles Schwab, Vanguard, etc.). This means that individual administrators likely manage dozens, even hundreds, of accounts.

Cultivating multiple DAF holders is as simple as reaching out to your community foundation and financial leaders in your community.

Start the conversation to learn about their processes and holdings. Offer information so they are well informed about your mission. When the time comes to grant funds, they might be willing to play matchmaker for your organization.

Another way to cultivate DAF dollars is to talk your donor base.

Thanks to the Giving USA report, we know that DAF donors are strategic, committed and granting out a lot of money. They tend to be 55+ and give to more than six charities (85 percent). They also volunteer (75 percent).

Who do you know that fits this demographic? Probably a bunch of people in your database. Remind them they can use DAF dollars toward many of the needs of your organization.

Donor-advised funds are here to stay and more relevant than ever to your fundraising program.

Do you have a strategy to make the best of their growth?

If not, are you ready to get started?

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