Fidelity Charitable, the largest sponsor of Donor Advised Funds has just released its 2024  Giving Report which you can –and should—download and read.

Top Lines From  Fidelity Report

Here’s a summary of Fidelity Charitable’s 2023 activity.

• 11.8  billion  in grants
• 2.3 million individual gifts –up from 626K 10 years ago
• given by 322,000 donors—up from 119,000 in 2014
• …and 199,000 charity recipients –up from 98K ten years ago.
• Overall, Fidelity Charitable distributed over half a billion dollars more in 2023 than in 2022.  

All this growth at a time when most giving has either plateaued or declined.

To me this Report represents a big Valentine, both to donors and nonprofit organizations provided we treat it as a box of Valentine’s Day Fundraising chocolates. I hope it triggers you to dig further into the layers of the DAF goodie box.

Here’s why.

Donor Advised Funds are fast becoming a major force in fundraising.  Whether your money raising, and donor communications channels are direct mail, digital, tv, billboards, personal visits for major gifts or all of the above, to ignore the importance of Donor Advised Funds (DAF’s)—and do nothing to seize the opportunity – constitutes malpractice.

According to the latest (2022) data from the National Philanthropic Trust there are 1,151 sponsors of DAFs in the U.S.,  holding assets valued two years ago at $229 billion. Although the top 5 in order of size—Fidelity Charitable, Schwab Charitable, Vanguard Charitable, National Philanthropic Trust and Silicon Valley Community Foundation—account for a heap of money, there clearly hundreds and hundreds more like the 725+ Community Foundations that your donors participate in.

Who cares if they make money out of it?  Who cares what the critics say? Until the tax laws and the motivations of financial services organizations like Fidelity Charitable change, Donor Advised Funds represent an immense opportunity for all of us.  That opportunity, as  Grandma Craver would say, “is plain as the ass on a goat.”

Five years ago, we described what was then a $110 billion DAF treasure trove: “Take a football field. Cover it to a depth of nine inches with $100 bills.  That’s $110 billion.”  Well, today the DAF treasure trove is estimated at $229 billion.  Add another 10 inches of $100 bills to our imaginary football field.

Which brings me to one of the great mysteries of my fundraising life:  why in the world do so many nonprofits ignore the strategic importance of DAFs.  Lots of fundraisers go batshit  crazy working or Giving Tuesday or stay up nights wondering how they can find and hire a digital guru at a time when Giving Tuesday raises $1.3 billion in 2023 while Fidelity Charitable alone distributed $11.7 billion.

 Most organizations need to think both strategically and practically about the advantages of gaining a detailed understanding of DAFs, educating their donors on the benefits, building relationships with the DAF sponsors like Fidelity Charitable, and some simple procedures in place inside their organization.

Separate Myth from Reality.

As a start, there are lots of myths out there  that need dispelling.  For example, there’s a persistent myth that the nonprofit does not receive donor information from the fund sponsor and cannot build a personal relationship with the donor.  Nonsense.

The reality is that donor contact information is readily available from the fund sponsor and, in most cases is transmitted to the charity when the grant is made.  Most sponsors have online information on this process.  For example, according to Fidelity Charitable 96% of the grants include information about the donor. You can find  Fidelity Charitable information here.

Another myth is that it takes a long time for the DAF sponsor to get a donor’s gift to the charity.  Nonsense again.  Every one of the large Fund Sponsors I reviewed have an electronic means of immediately transferring funds when the donor decides to make a gift.  Here’s Fidelity Charitable’s description of its transfer process

Fortunately, more and more nonprofits are getting beyond the myths and beginning to pay serious attention to the power and potential of DAFs.  Some are keeping  track of all their DAF donors  because they offer special opportunities for sustainer giving, for planned giving and for upgrading to mid-level or major gift status.  Others are making sure their tax ID numbers are easily available to donors on a DAF sponsor’s file and on their own websites.

For a quick review of steps a nonprofit should be taking  to engage DAF donors see these 5 steps recommended by Fidelity Charitable.

One Stat to be Alert To

I’ll leave you with this one statistic from Fidelity Charitable’s 2024 Report.  Nearly 80% of that $11.7 billion in grants went to organizations  the donor had supported in the past.  

Opportunity is knocking.  Find your way to the door and at least answer it for you own donors.

Roger