Philanthropic Fundraising – DAF’s
In the last few weeks I saw two interesting headlines in the news. The first was that “wealthy individuals will donate up to $8 trillion by 2035, according to Merrill Lynch.” The second was that the “Fidelity Charitable Gift Fund again claimed the top spot on the Philanthropy 400… The Chronicle’s annual ranking of charities that raise the most from individual, foundations and companies.” What does this tell us about philanthropic fundraising and the future?
The good news is that there will continue to be large sums of money donated with charitable intent. The not-so-good news is that “charities” like Fidelity, Schwab, Merrill, National Christian Foundation, to name a few, are doing an amazing job of convincing donors that Donor Advised Funds are the best place for charitable gifts and philanthropic fundraising. For donors it’s a safe haven of anonymity, if desired, and an immediate tax benefit in certain respects. It also provides guidance on giving. For charities, however, it creates another wall between the donor and the organization. As DAF’s continue to grow, they will play an even greater impact on charities globally, not to mention the amount of assets sitting in accounts that are not touched…..until Congress changes the rules on disbursements.
A few months back a major donor of a client of ours made a multi-million commitment to a campaign and the funds were coming from his DAF. This limited how much could be counted for the campaign based on the DAF rules regarding pledges. The organization could only count 25% of his verbal commitment because that is what he paid in the first year, and then there are the FASB rules (which are changing) with respect to gift counting.
Given the growth of DAF’s and the amount of philanthropic fundraising in the next 20 years, it would serve us all well to develop strategies for individual giving from donors who feel better served by a DAF than giving directly to your organization.
How would you respond to prospective donors that ask you why giving directly to your organization is a better “investment” than giving through their DAF?
Written by: Paul D’Alessandro
Founder and Chairman
D’Alessandro, Inc.
