Last week I was in South Dakota to “kick-off” a graduate certificate program for clergy co-sponsored by Dakota Wesleyan University and the Dakotas and Minnesota Conference of the United Methodist Church. Several pastors wanted more information on Donor-Advised Funds(DAF) as their congregations had received gifts (often called grants) from a local community foundation DAF.
What is a donor-advised fund? It is a charitable giving vehicle administered by a public charity to manage the charitable donations of a family or individual. DAF’s are housed in private wealth management firms as well as in community foundations. The appeal of a DAF is that it allows an individual or family to receive an immediate tax deduction for monies they put into a DAF, monies they will in turn distribute as charitable contributions at a later date. While they surrender ownership of the money or securities they put in the fund, they retain advisory privileges as to how the monies will be distributed to charities. With the new 2018 tax law framing the horizon many people made substantial DAF contributions at the end of 2017. Today there are more than 285,000 donor-advised funds across the country.[i]
A recent Giving USA study notes that congregations are the number two recipient of donor-advised fund grants; education is number one.[ii]Dr. Anna Pruitt, managing editor of Giving USA, describes DAF’s as a tool that enables donors to pursue their charitable goals in a thoughtful and strategic manner.[iii]
Donor-advised funds are an emerging fundraising opportunity for congregations! If you have someone in your congregation who gifted you via a DAF, thank them. Don’t thank the community or wealth management firm that sent the check. Personally thank the donor! Engage them in a pastoral conversation. Learn from them!
Holders of donor-advised funds have much to teach us about giving. If the gift was designated as a “grant” talk with them as to how they would like to see their gift used. I have observed that people who create DAF’s are often older people. As an older person myself, we are interested in legacy issues: How will our family, our friends, our church remember us? Such a conversation can be life-changing for both the donor and the congregation.
[i]Nonprofit Quarterly, 12/2/2018
[ii]Giving USA Report on Donor Advised Funds. See: First Day Podcast from The Fund Raising School, Indiana University Lilly Family School of Philanthropy, 7/16/18.
[iii]7/16/18 First Day Podcast with Dr. Anna Pruitt,