Donor-Advised Funds (DAFs) are quickly changing how charitable giving works. In the United States, they have become one of the most popular ways for people to give.
African fundraisers and nonprofit leaders may find important lessons in a new report titled “Reinventing the Cycle: Adapting Relationship Fundraising for Donors Who Use DAFs”.
The report explains how fundraisers can work better with DAF donors, and those lessons could help African organizations raise more money from both local and international donors.
What Are DAFs?
DAFs are special accounts where donors place money for charity. The money is managed by a public charity, often a financial organization.
The donor can recommend how the money should be given to other charities later. This allows donors to give at their own pace while enjoying tax benefits.
In 2023, DAFs held over $250 billion and received 11% of all charitable donations in the US. Grants from DAFs totaled nearly $55 billion that year.
These funds are not just for the wealthy. Many DAFs are now available to donors with modest contributions. Half of all DAF accounts in the US hold less than $50,000.
Why This Matters for African
Many international donors who support African projects use DAFs. African organizations could benefit from this if they understand how to engage with DAF donors. The new report offers insights into how fundraisers can build relationships with these donors.
Relationship Fundraising Still Works
The study, based on interviews with 46 experienced fundraisers in the US, found that “relationship fundraising” remains the best approach.
This means fundraisers must focus on building trust and connection with donors, not just asking for money. DAF donors should be treated like any other major donor, with personalized attention and communication.
Common Challenges
The report outlines six challenges that organizations often face when working with DAFs:
- Verifying the Organization: Some DAF sponsors need extra documentation before they send a grant. This can be hard for small or new nonprofits.
- Anonymous Donations: Sometimes, donors give through DAFs without revealing their identity. This makes it hard to thank them or build a relationship.
- Data Entry Issues: Many organizations don’t track DAF donors correctly in their databases. Important information gets lost.
- Thanking the Donor: Some charities assume DAF donors don’t need a thank-you because they get receipts from the DAF sponsor. This can hurt future giving.
- Understanding Rules: DAFs have rules, like no personal benefits or event tickets. Fundraisers must educate donors and avoid breaking these rules.
- Poor Communication: Donors often don’t inform charities that a DAF grant is coming. This causes delays and confusion.
These are real issues that African NGOs may also face when dealing with international DAF grants.
The Opportunities
The report also highlights four opportunities that DAFs present for fundraisers:
- Signal of Serious Giving: Having a DAF shows that a donor is serious about giving. They have already set aside the money for charity. That’s a strong signal for fundraisers.
- Deeper Conversations: DAF donors are often more financially literate and open to discussing big-picture impact. This makes it easier to have strategic conversations.
- Useful Insights: Fundraisers can learn a lot from DAF activity—like when a donor prefers to give or how much they give each year.
- More Confident Asking: Since the money is already designated for charity, fundraisers feel more confident asking for support.
For African fundraisers, this means being bold when approaching DAF donors, especially those based abroad who already support work on the continent.
The New Fundraising Cycle
The report introduces a new model called the “DAF Donor Relationship Management Cycle.” It builds on the traditional eight-step major gift cycle but includes special steps for dealing with DAFs. These include:
- Identifying whether a donor uses a DAF
- Processing the grant correctly
- Giving credit to both the DAF sponsor and the donor
- Thanking the donor personally, even if the DAF sponsor sent a receipt
This model is useful for African nonprofits that want to standardize how they handle DAF grants.
Key Roles for Fundraisers
The report identifies five key roles fundraisers must play when dealing with DAF donors:
- Investigator: Tracks down anonymous or unclear donations.
- Strategist: Plans long-term relationships based on donor capacity.
- Educator: Informs donors about DAF rules and best practices.
- Facilitator: Helps donors complete the DAF grant process.
- Collaborator: Works closely with donors to achieve their philanthropic goals.
These roles can guide African fundraisers who want to grow their donor base, especially from international DAFs.
What African Organizations Should Do
- Get Listed: Ensure your charity is listed on platforms like GuideStar. Many DAF sponsors use these platforms to verify organizations.
- Update Your Website: Include your charity’s legal name, registration number, and address. Make it easy for donors to recommend grants.
- Train Your Team: Teach staff how to process DAF grants and track DAF donors in your CRM system.
- Communicate Clearly: Ask donors if they plan to use a DAF. This helps you prepare.
- Say Thank You: Even if you don’t know the donor’s full name, send a thank-you message when possible.
Final Thoughts
Donor-Advised Funds are shaping the future of philanthropy. While the report focuses on US fundraisers, its lessons apply globally.
For Africa, the growing use of DAFs by international donors is a chance to build new partnerships and unlock funding.
The key is to focus on relationships, learn the rules, and adapt processes to fit this new way of giving.
African nonprofits that prepare for DAFs today will be better placed to receive and grow support tomorrow.
