New research about the world of donor-advised funds (DAFs) and their significant impact on nonprofit fundraising. Mitch Stein, head of strategy at Chariot, brings a wealth of knowledge to the table, sharing eye-popping insights from a recent report that explores DAFs’ growing influence in the philanthropic landscape.
Mitch begins by simplifying what a DAF is, likening it to a 401K or HSA, but for charitable giving. He explains how a DAF allows donors to contribute assets, receive an immediate tax deduction, and then allocate those funds to charities over time. The key innovation from Chariot, the “DAF Pay” tool, integrates DAFs directly into standard fundraising processes, making it easier for donors to give immediately without the hassle of logging into separate portals. As Stein emphasizes, “It’s about meeting donors at the moment they’re inspired to give.”
The conversation describes the rapid growth of DAFs, which have seen a near tenfold increase in accounts and assets over the past decade. Mitch cites that this growth is not limited to the ultra-wealthy, as more everyday donors, including younger demographics, are utilizing DAFs. He dispels the myth that DAFs are only for the wealthy, pointing out that “The minimum gift size has come down to $50,” showing how this tool is being used by a broader audience.
Mitch continues this informative conversation, discussing the implications of this growth for nonprofits, particularly in light of their report findings. The report reveals that nonprofits have seen a median increase of 214% in DAF revenue over the past five years, compared to just 1% in non-DAF giving. Mitch conveys the strategic importance of DAFs, stating, “For every single organization that participated, they’re seeing higher growth in DAF revenue than non-DAF revenue.”
Mitch also talks about concerns about potential regulatory changes, acknowledging that while the IRS and Congress are paying attention to DAFs, any significant changes are unlikely in the near future. He reassures that DAFs are here to stay, stressing their role as a “key vehicle of support that’s proven to really increase giving for individuals.”
This very informative episode concludes with a discussion on the upcoming “DAF Day of Giving” on October 10th, a new initiative aimed at encouraging collective giving through DAFs. All nonprofits can participate, as the day is a “shared event, similar to Giving Tuesday,” and is designed to be accessible to organizations of all sizes.