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January 15, 2015

The Rise of Donor-Advised Funds

The Rise of Donor-Advised Funds


“There are many wealthy people out there that honestly don’t know what to do with their money. It’s surprising to me how many of them come to their attorneys or to a trust department of a bank and say, ‘Where shall I leave my money?"


This quotation from a donor, which we often share to illustrate the wealth of opportunity in development work, is reinforced by the continued growth of donor-advised funds in recent months. Donor-advised funds are the fastest growing charitable giving vehicles in the United States. Schwab Charitable and Fidelity have both seen huge increases in the number of grants made from the same time periods in 2013. Schwab’s grants increased by 55 percent from July 1 to the end of September and Fidelity’s increased by 27 percent in the first three quarters of 2014.


Notably, their growth corresponds with an increase in donors’ involvement with grant distribution, according to Schwab Charitable’s president, Kim Laughton. While donors do not have direct control over their funds, they do have large influence on where their money goes. Laughton says that the top three giving areas for clients are education, health and human services, and social benefit organizations.


In our workshops, we discuss the importance of individuals in charitable giving. Donor-advised funds are no different. As this data indicates, donors who do contribute to DAFs need to be engaged like any other donor. Even after placing their resources in a DAF, donors still have a deep desire to support causes that are personally meaningful. Not knowing what to do with their money certainly doesn’t mean that these donors don’t care—in fact, the truth is the exact opposite.


The same donor told us that making passion-based philanthropic contributions is a cause of deep personal satisfaction in his life. He also believes everyone would enjoy it if they knew about the opportunity:


“If those who have never given [philanthropically] could appreciate the fun and the joy that I’ve had out of giving… I feel that they’re missing an awfully important part of life. So I suspect that it probably needs a good intermediary, a good fundraiser who can open the doors of these opportunities, and can show the possibilities of what can happen in gifting. Can point to projects that were made possible simply by gifts. And I think that’s where the fundraiser can really do something, maybe introducing that sort of pleasure to individuals never having experienced it.”


We as development professionals are uniquely positioned to help donors make contributions to causes that connect them with their passions. The opportunity is tremendous.


View the complete article. >>



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