DAFs Will Change Gifts-in-Wills Forever

Donor Advised Funds (DAFs) are increasingly popular – and this may change gifts-in-wills fundraising forever.

If a donor primarily gives through their DAF in their lifetime, why would that change when they write their Will?

It’s likely these donors will set up their estate gifts to go to their DAF, which will then be granted out to charities.

Some donors may direct the fund to spend down immediately, or within a short timeframe.

Others will direct the fund to make annual gifts to select causes, in perpetuity. In my experience, this is the more popular option.

The irony is this means your typical major donor will give smaller gifts from their estate, whereas your “average” annual donor – who doesn’t have the liquid wealth to create a DAF in-lifetime – will be more likely to give you a transformational estate gift.

And we already know middle-class donors are more likely to give their full estate to charity than the wealthiest donors, so this will likely continue.

Talk about flipping the script!

So what should you, a fundraiser, do about this?

1 - Include questions about DAFs in your Planned Giving surveys and other acquisition tactics. (I.e. The tactics you use to get Planned Giving “hand raisers”.) Track if a donor has a DAF in your database - even if they aren’t currently giving to you with that DAF. Ideally put this information in a field that can be reported on.

2 - Make sure you’re correctly soft-crediting your DAF gifts to their associated donors, and report on who in your Planned Giving portfolio has a DAF. It’s important to understand what Planned Giving prospects are using these accounts.

3 - If a donor informs you’ll receive funds from their DAF in their estate, get curious. Ask about what they hope their gift will achieve in the future. Ask if their family will be involved with the DAF at all - this could make your future funding uncertain.

3.5 - And make sure you’re stewarding that donor who is leaving you a DAF gift the way you would any legacy donor!

4 - Have courageous conversations with donors about your future needs. If your cause would benefit from a gift-in-will given directly to you, talk about it with your donor. If you build enough trust and rapport, you can tactfully discuss the problems with “in perpetuity” funds and share your dreams for the future – then let them know how they can help you get there.

This is why when hiring a Planned Giving consultant or staff member, it’s crucial they understand different asset-based gifts and integrate them all into their work - it’s not only about cash-based gifts-in-wills anymore!

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