Fifty-five percent of nonprofits say they are concerned about the difficulty of soliciting gifts from donor-advised funds, according to a new survey by the Indiana University Lilly Family School of Philanthropy. The concern level was especially high — 70 percent — among nonprofits that had never received gifts from donor-advised funds.
The study also found that 42 percent of nonprofits that had never received gifts from donor-advised funds are concerned about the administrative burdens of dealing with such gifts. However, nonprofits’ comfort level increased sharply with some experience. Only 24 percent of nonprofits that have received donor-advised-fund gifts expressed concerns about the administrative burden.
The findings are from a survey completed by 448 nonprofit organizations across the country with annual revenue ranging from $100,000 to more than $50 million. The study was funded by a grant from Schwab Charitable, which sponsors donor-advised-fund accounts.
Una Osili, associate dean for research and international programs at the Lilly Family School, said that one of the main reasons for conducting the study was that although there is a growing body of research about the giving side of donor-advised funds, much less is known about the recipients.
“These funds are becoming important mechanisms for nonprofits, not just for donors,” Osili said.
Other findings include:
- 70 percent of nonprofits received at least one gift from a donor-advised fund in the past three years.
- 87 percent of nonprofits that explicitly asked for donor-advised-fund gifts had received such contributions, compared with 42 percent that didn’t solicit them.
- The most common method of soliciting donor-advised-fund gifts was to meet with donors (42 percent), followed by communicating with sponsoring organizations (26 percent).
Concerns About Connecting With Donors
The report included case studies in which nonprofits shared details about their experiences with donor-advised funds. The case studies presented a largely optimistic view of donor-advised funds, including their role in boosting donations amid the pandemic and economic downturn. However, some frustrations also were expressed.
The study presented this viewpoint from a large national education organization: “While potential donors are often attracted to the possibility of anonymous giving offered by DAFs, that same anonymity can be a challenge to the nonprofit organization’s ability to develop an authentic and personal connection with the donor or to steward the donor’s investment by reporting back the impact of their support.”
Another education nonprofit, a midsize group located in the West, expressed similar frustrations, according to the study: “DAF gifts that arrive anonymously are a challenge.” This organization “knows most of its donors, and the relationship involves a high degree of personal touch. They noted that it can be frustrating when a gift arrives and staff and volunteers don’t have a way to express gratitude to the donor.”
A midsize environmental group in the Midwest noted that donor-advised funds can present special challenges for membership nonprofits. “It isn’t always clear to DAF donors that they cannot receive benefits such as organization memberships when giving through a DAF,” the report states. “This has been especially frustrating for long-term donors who have shifted from traditional cash or check giving to giving through a DAF at the same level but no longer receive the membership cards as they are used to receiving.”
