Warehouses of Wealth – Part 2

October 17, 2018 at 10:46 am Leave a comment

Philanthropic fracking, warehouses of wealth whatever you call them – donor advised funds (DAFs) and our donors in the United States have come under fire – including the institutions that house all this wealth. As I wrote Philanthropic Fracking Part 1 the money in these funds has been placed there by donors, legally, because of a 1991 IRS rule that allowed financial advisors to literally “house” philanthropic dollars.

So what’s the fuss? What’s past is history. If the third sector wanted to “avoid” where we are today – 1991 was the time to advocate. Bashing donors and their choice of philanthropic “investment” tools along with their financial advisors – not a good donor relationship strategy. Think for a minute about the conversation our donors may have with their financial advisors after reading about the attacks on their DAF. I don’t think it begins or ends with, “You should give more from your DAF.”

The DAF holds the DONORS’ money. DONORS can do with it when they choose. If we are lucky enough to have donors who have set up DAFs, it is up to us to take them on a donor journey that opens their minds, their hearts and their giving. The DAF is merely a vehicle through which they can make a difference.

So here’s my idea – do with it as you like…The average DAF balance was more than $298,000 in 2016 – National Philanthropic Trust 2017 Donor Advised Fund Report.

First data knowledge is good thing:

  1. Is our fundraising donor base ready to track giving through donor advised funds?
  2. How many donors in our donor base have a DAF?
  3. How many gifts come through a DAF annually?
  4. What is the philanthropic revenue made through DAFs?
  5. Are donors and their DAF linked in the database?
  6. Do we know who the leading investment advisors are in our community and how they are connected to our donors?

All of this information will tell you whether you need to put priority focus and your energy on donors with DAFs and their advisors.

If your answer to the questions above is YES – Let’s get donor focused and learn more about the why and how the donor set up their DAF. This is part of relationship building – it is NOT a survey! This information provides insights into the philanthropic motivations and investment planning of our donors. This will help us work best to empower our donors’ philanthropic passions and make them reality.

  • What motivated the donor to set up their DAF?
    • Could have been tax reasons, investment advice, philanthropic strategy, legacy or planned giving. It may be their very first foray into philanthropy.
  • Do they have long/short term plans for the DAF?
    • While a donor may have established the DAF for tax reasons – some donors do plan a “big cash gift” as an alumnus, grateful patient, support disease research or a religious group. Others plan to leave a legacy when they die. Some donors haven’t thought about it.
  • How would the donor like to recognized?
    • With or without a DAF – we should know how the donor likes to be recognized, but it’s always good to check.
  • Where has the donor made already made philanthropic contributions through their DAF?
  • Have we reached out to financial advisors at the biggest DAFs in our neighborhood?
    • Perhaps our donors will introduce us to their advisor and others who would join them as an advocate for our work.

Bottom line, donors with a DAF have good philanthropic intent (I always assume good intentions where philanthropy is involved). It is up to us as philanthropic advisors, fundraisers whatever your title may be – to know our donors, help them connect their philanthropic passions to mission and programs that matter to THEM.

Entry filed under: Fundraising. Tags: , , , , .

Philanthropic Fracking – Part 1 Moving Fundraising Forward

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