The most effective fundraising aims to help the goals of both the organization and the donor. And while helping a nonprofit realize its mission and increase its impact are great motivators for donors, there are also some big financial benefits for being charitable. Donor-advised funds make it really easy for benefactors to take advantage of their giving.
What are donor-advised funds?
Donor-advised funds provide a way for investors to designate they want to contribute funds to charity, even if they don’t yet know where they want it to go. In the meantime, they can continue to invest those funds in something known as investment pools. When the investor is ready to choose a recipient, they can recommend a grant which releases funds to the charity or charities they choose.
There are lots of benefits of donor-advised funds for investors, including:
- Possible tax advantages. There are a number of ways that giving to a DAF can have tax benefits for an investor. To learn more, read this article from Fidelity Charitable.
- Flexibility in assets. Donors can contribute public or private stock or other interests. But that’s not all – DAFs often accept everything from bonds to Bitcoin.
- Ability for assets to grow. DAFs allow investors to continue to seek a return while they decide where to grant. This allows them to try to make the most of their assets until they decide to grant.
Even better, donor-advised funds aren’t limited to a top-tier investors. Fidelity Charitable, for instance, doesn’t have a minimum account balance, and grants can be as small as $50.
How can nonprofits make the most of donor-advised funds?
There are a few simple things you can do to take full advantage of DAFs.
First, make sure you mention DAFs on the Ways to Give page on your website. You may also want to include something like the DAF Direct widget to make it really easy for donors to grant to you.
Second, look into giving the largest providers (Fidelity Charitable, Schwab Charitable, etc.) information for electronic funds transfers, or EFTs. This allows them to send funds directly to your bank account instead of having to deal with checks. It might also reduce processing delay!
Donor-advised funds are an easy way for investors of all kinds to support you. Make sure you give them that chance by making it clear that it’s an option you encourage!
This post is meant as general information and should not be considered financial or tax advice. For details on how to use donor-advised funds, please consult a financial or tax professional.
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