You Can Make Recurring Gifts From Your Donor-Advised Fund
Donor-advised funds — a lot has been written about it. Especially with the changes in tax laws, more and more donors have “flocked” to it.
Just a few quick facts about donor-advised funds (DAFs):
- You don’t need to be super rich to start one — $5,000 is all it takes.
- A DAF is easy to set up. If you already have investments with an investment firm like Schwab or Fidelity, you’ll be able to create a DAF there, and it can all be done online in just a few minutes.
- You can see your money grow quickly, which means you’ll be able to give more money to your favorite charities. (This all depends on the stock market, of course.)
- You’ll get a nice tax deduction. Here’s a comparison of different ways to give.
- You can keep your gifts confidential. Not ideal for charities as they can’t recognize you, but if that’s something you feel strongly about, it’s a nice perk. But don’t worry too much, only 3% of donors wanted to keep their gift anonymous, according to the “2019 Giving Report.”
- Donors typically will stay loyal to charities they’ve previously supported, so you will not necessarily lose your
donors. - Most DAF gifts will go to support where it’s needed most (60% indicated this for Fidelity DAFs).
- Most DAF providers will call these gifts “grants,” not to confuse with other grant support.
Credit: Fidelity Charitable
For Fidelity alone, in 2018, donors established 15,000 new giving accounts. Because they can receive an immediate tax deduction and then recommend grants over time, many donors are turning to donor-advised funds after tax reform. This allows them to time their charitable gifts for maximum tax savings while maintaining regular support to the charities they love.
Did You Know It’s Possible to Make Recurring Gifts to Your Favorite Charities?
It requires a minimum of $50 a month (which is higher than the $24 to $36 on average a month we’re seeing for monthly gifts now).
You can set it up indefinitely or with an end date. You decide. You’re in control just like you would when setting up an automatic payment from your checking account to a charity.
So, as an organization, be on the lookout for checks starting to come in from DAFs on the same date every month.
Make sure you record them appropriately, and you give the donor the credit they deserve.
Check the gifts against any sustainers you already have set up.
Some donors may be brand-new recurring donors. Others may stop their automatic gifts from their credit card and move to recurring gifts from their DAFs to benefit from the tax deduction. You may also find that donors start additional recurring gifts. Contact the donor as soon as you realize that they already have a monthly gift, and you’ll get their DAF recurring gift. Don’t just assume this is a replacement. Don’t assume this is a simple upgrade. Don’t assume anything. Always ask the donor what they prefer to do. Find out if this is an indefinite or recurring gift with an end date.
Just like DAFs are growing, I foresee that recurring gifts from DAFs will grow as well. It’s yet another way for donors to support your organization on an ongoing basis. And the gifts are certainly nothing to sneeze at!
- Categories:
- Financial Services
- Grants
Erica Waasdorp is one of the leading experts on monthly giving. She is the president of A Direct Solution, a company serving nonprofit organizations with fundraising and direct marketing needs, with a focus on monthly giving and appeals. She authored "Monthly Giving: The Sleeping Giant" and "Monthly Giving Made Easy." She regularly blogs and presents on fundraising, appeals and monthly giving — in person and through webinars. She is happy to answer any questions you may have about this great way of improving retention rates for your donors.
Erica has over 30 years of experience in nonprofits and direct response. She helped the nonprofits she works with raise millions of dollars through monthly giving programs. She is also very actively supports organizations with annual fund planning and execution, ranging from copywriting, creative, lists, print and mail execution.
When she’s not working or writing, Erica can be found on the golf course (she’s a straight shooter) or quietly reading a book. And if there’s an event with a live band, she and her husband, Patrick, can be found on the dance floor. She also loves watching British drama on PBS. Erica and Patrick have two step sons and a cat, Mientje.
