Welcome to Fundraising Update. This week, we look at new research on how donors feel about A.I. and what that might mean for building trust. Plus, we learn more about the growing impact of donor-advised funds.

I’m Jie Jenny Zou, fundraising reporter at the Chronicle of Philanthropy. If you have ideas, comments, or questions about this newsletter, please write me.

Thanks to our sponsor DonorPerfect for supporting Fundraising Update.

How Do Donors Feel About A.I.?

The authors of a new study on donors and artificial intelligence say the results are a signal for nonprofits to pause and consider whether their use of the technology could negatively impact trust, as I reported recently.

“The rate of A.I. adoption is profound,” said Nathan Chappell, study co-author. “Most, if not every, organization has taken some things for granted, specifically what donors think.”

Chappell, who serves as senior vice president of DonorSearchAI, co-authored the self-funded study with Cherian Koshy, vice president of Kindsight. The report is not affiliated with either company or Fundraising.AI, an industry collective founded by Chappell in 2018 to promulgate safeguards around the use of A.I. in philanthropy.

It’s important for nonprofits to get A.I. use right, Chappell says, because “the nonprofit sector operates in the currency of trust.”

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The study, conducted in August, surveyed 1,006 donors in the U.S. who have given to a nonprofit in the past year. Survey respondents were asked about their familiarity with A.I. and whether its use would affect their willingness to donate.

Thirty-one percent of respondents said they would be less likely to donate to charities that used A.I., which the authors said indicates some apprehension towards the technology’s adoption.

“A third of people are questioning if this is good or bad,” Chappell said. “It’s an easy takeaway to say, ‘Look, we need to safeguard and promote transparency and trust.’”

Thirty-four percent of respondents said A.I. use would not affect their donations either way, while 9 percent said they would be more likely to donate.

Overall, 82 percent of respondents had some knowledge of A.I. Eighty-six percent of those surveyed said they considered transparency in A.I. usage to be either “very” or “somewhat important.” When it came to personalizing donation appeals with A.I., such as chatbots or avatars resembling humans, nearly 40 percent of respondents expressed some level of discomfort.

For more on how donors feel about A.I., read the full story.

Need to Know

— Share of all giving in 2022 that came from donor-advised funds

Gifts from donor-advised funds accounted for nearly 10 percent of all giving to charity in 2022, according to Giving USA, an eye-popping $52 billion in total. A new day devoted to DAF giving is launching October 10 to increase awareness about the accounts and encourage more donors to give from them, reports my colleague Rasheeda Childress.

“The goal is just to raise awareness of what DAFs are and why they’re helpful,” says Mitch Stein, head of strategy at Chariot, the DAF payment processor that is leading the DAF Day initiative. “Then to activate donors with a specific, dedicated day where people really feel like a part of something. Giving Tuesday has been able to do this, with lots of communities leveraging this giving day locally. So it just makes sense as a tool that can activate donors.”

Fundraisers have increasingly heard about the power of finding supporters who have donor-advised funds, because they can offer steady funding, even in challenging economic times. But for many, DAFs are still mysterious — and controversial.

Donors get an immediate tax deduction for putting money in their DAFs, but there are no requirements for how quickly it’s distributed to charity. Critics argue that by talking about DAFs as IRA-like accounts, sponsors inadvertently encourage donors to stockpile cash, rather than make grants to charities. Opponents have called for a range of reforms, including payout rules and disclosure requirements.

Yet despite those concerns, donor-advised funds continue to grow in size and influence. Ahead of the inaugural DAF Day, the Chronicle dug into the latest research and spoke to veteran fundraisers about the importance of DAF giving and their best advice on letting donors know that your charity accepts DAF gifts.

For more about DAF giving, read the full story.

Plus ...

• Money is Power. As the 2024 election cycle enters its final weeks, an elite group of philanthropists is on track to pump more into federal campaigns than ever before, my colleague Eden Stiffman reports.

  These ultra-wealthy donors, whose charitable gifts the Chronicle tracks, account for roughly 8.5 percent of the $6.3 billion that individuals and couples have contributed as of September 17, according to a Chronicle analysis of Federal Election Commission data compiled by Open Secrets, a campaign-finance watchdog.

  Donors such as Ken Griffin, Paul Singer, Michael Bloomberg, and Reid Hoffman are collectively giving hundreds of millions to candidates and political-action committees called super PACs, which can receive unlimited amounts to advocate for or against candidates.

  For more, read Eden’s full story.

Gift of the Week

Norman and Melinda Payson gave $20 million to City of Hope, a cancer research and treatment center. The funding will create a pancreas center, where physician scientists will conduct research and work to develop new treatments for pancreatic cancer and diabetes. Norman Payson is a physician who has led a number of healthcare companies in Orange County, Calif.

For other notable gifts this week, read my colleague Maria Di Mento’s Gifts Roundup column. To learn about other big donations, see our database of gifts of $1 million or more, which is updated regularly and has data going back to 2000.

Advice and Opinion

How 3 Charities Are Trying to Attract Everyday Donors. It’s no secret that wealthy donors are becoming dominant in the nonprofit sector — but that’s especially true for larger charities.

The Case for Doing Away With the Charitable Deduction (Opinion). A tax code tweak that replaces the deduction with matching grants could encourage everyone to donate.

What We’re Reading

How Generous Are America’s Wealthiest People? America’s top 400 richest people have donated just 5 percent of their combined $5.4 trillion in wealth, according to Forbes.

The findings are part of Forbes’ annual Philanthropy Score, which tracks lifetime charitable contributions from members of The Forbes 400 list, which include multi-billionaires like Amazon founder Jeff Bezos and Microsoft co-founder Bill Gates.

For the fifth year in a row, Forbes crowned hedge fund founder George Soros the most generous, citing total donations amounting to 74 percent of his fortune. Among the least charitable? Those who have given away less than 1 percent of their wealth, a club that accounted for 134 members of the 400, including Tesla CEO Elon Musk as well as Oracle co-founder Larry Ellison. (Forbes)