Donor Advised Funds, or DAFs, are increasing in popularity. Despite being around since the 1930s, DAFs grew by 16.3% from 2019 to 2020 alone. They are one of the fastest growing vehicles for giving today.¹ If your organization can target and reach out to those individuals, you will be able to plan for additional revenue streams and donor capacity that will allow your nonprofit to go further.

Donor Advised Funds might be an untapped resource for your organization. These philanthropy-minded individuals have the potential to be high value, sustaining donors, but finding them can feel like searching for a needle in a haystack.

The good news is that these donors are probably already in your active or lapsed donor files, and identifying them and their potential can open up doors you never knew were there. Let’s talk a little about who has a DAF and how you might find them in your membership rolls.

What is a Donor Advised Fund (DAF) and how popular are they?

A Donor Advised Fund (DAF) is a way to donate money. Individuals or companies set up a DAF through a sponsoring organization, and then they give money, stocks or securities to the fund and receive immediate tax benefits for their donation at the time of the donation. The money then accrues, tax free, in the fund until the donor makes a decision about which charitable organization they want to receive a portion of the money in the fund.

Their decision to allocate money towards a nonprofit could come days, months or years after committing the money. The donor can’t take back the money, but they do decide where the money goes. In this way it acts as a method for donors to optimize the benefits they’ll receive from charitable giving.

Because they may not know which charities they will donate to when they start the fund, getting in front of these valuable donors to make it on their list when they do donate is crucial.

DAFs are becoming more and more popular. In 2021, grants from DAFs to qualified charities totaled an estimated. $34.67 billion, representing a 27.0 percent increase compared to 2019.² And the sheer number of DAFs is rising, too, increasing 16% to top 1 million funds in 2021 for the first time.³

In a time of rapid inflation, understanding and procuring Donor Advised Funds are more important than ever. Helene Vallone-Raffaele, Vice President of Donor Strategy & Experience for UNICEF USA, stressed that because DAF funds are locked-in, they can withstand economic fluctuations.⁴

Let’s draw a picture of a DAF and the person who holds one

Who has a DAF? This is the biggest question out there. Anyone can have a DAF, and recently sponsoring organizations have reduced the minimum donation amount to make it easier to start and maintain a DAF.

People who hold a DAF are likely to:

• Have disposable income;
• Give enough to charity to make a difference on their taxes;
• Be looking to secure a charitable legacy and involve their family in their charitable giving;
• Take a long time to decide which nonprofit they’d like to support.

In fact, one study showed that 68% of individuals surveyed used a DAF to take more time to research and decide which nonprofits to give to, and 62% used it to sustain their giving through retirement.

The NPT claims that the average size of a DAF in 2021 was $159,019. When we use data to tease out who in your current or past donor files might have a DAF, we’ll look for information that points to some of those indicators so that you can strategize ask amounts.

Technology and data can make your search for donors with a DAF easier.

At Data Axle, we start with your current and past donor files. Donors with DAFs are more likely to be able to give larger amounts, and may be waiting to find a cause to support with a larger sum. Or they may have given before, and now they’re ready to talk about how to build a legacy through their donations to you. We want to find people who already support what you do, and just need a deeper relationship to commit more.

Data Axle has a wide reach. We work with companies to share vital data in data co-ops. We also have consumer data, business data and B2C link that brings the consumer and business information together. B2C link helps us see who among your donors owns businesses or is a C level executive, for instance.

Because of the amount of information we have available to us, we have a deep understanding of the factors that indicate which person is more likely to hold a DAF. Attributes help us understand information like your donor’s online habits, their interests and their past behaviors, which we use to identify who is likely to have donor-advised funds.

Recently Data Axle analyzed one of our clients, for instance, and found that potentially 2.4% of their current donors had DAF accounts. That allowed our client to move those donors to a different audience type, focus their efforts and achieve a higher ROI. Vanguard⁵ suggests that donors with DAFs give an average of 12k every time, and that sustaining membership is more likely. So when we talk about a higher ROI, the possible gain is appreciable. If our client converted just 1% of their possible DAF holders, they could see a return of around 145k in donations.

The key thing to understand about converting DAF holders is that the money is already spent. Your donor already committed the money from their budget, and all it takes is for them to tell their sponsoring organization where to allocate it. So your conversion mindset will be different.

You’ve found the DAF holders in your donor files. Now what?

Once you have a list in your hands of people who already support your cause and who also may have a DAF, your major gifts and planned giving teams can prioritize building deeper relationships with these high-value donors.

Data will allow you to segment your audiences so you can speak more precisely. Younger people with DAFs are likely on a path to become high value donors down the line, so ask amounts should reflect their donor capacity, while still building a deep relationship. Making DAF donating online easy by using a DAF widget on your website will help you connect to your more tech savvy members. In fact, Millennial donors are ahead of the curve when it comes to using and donating via DAFs, especially via online portals. Connect with them now so that in twenty years they’re a loyal sustaining member of your organization.

For high value donors who are more established, crafting an omnichannel strategy that connects to their interests and past behavior will help you connect with them. Email isn’t dead! Think about where your touchpoints are and how they create a unified message for your members.

Finding a DAF holder requires the data and the processing power to connect the dots. We leverage extensive historical consumer data, demographics, and behaviors. Data Axle can then analyze your donor database and identify which of your donors are likely to have a DAF.

DAFs could be a turning point for your bottom line

If you don’t know who in your donor lists has a DAF, it’s time to figure it out. This way you can better empathize with the interests and needs of those specific donors, and you can tailor your language to connect with them.

When you find them, DAF holders represent a valuable audience who can take your organization further than you thought possible. Their budget is already set and stable, so they can donate even during tough economic times, and they’re often looking to make a big impact. Connecting with DAF holders can make a big difference towards your budget and fundraising goals.