A giving strategy that passes to the next generation

Donor-advised funds (DAFs) are the fastest-growing charitable giving vehicle in the country. One reason they’ve grown so much, so fast is their accessibility. You don’t have to be ultra-wealthy to have a philanthropic strategy and an organized giving vehicle to execute it.

According to Drew Hastings, chief development officer of the National Philanthropic Trust in Jenkintown, Pa., donors also have a choice of where to establish their donor-advised fund–national charities, community foundations, religiously-focused charities, universities and hospitals offer them.

Hastings made comments today during a session “Demystifying Donor Advised Funds: Driving Impact in Our Communities.” Another reason donor-advised funds concept is popular is it is a donor-centered giving tool.

Donor-advised funds have traditionally been a tool for individuals or families to support a variety of charities they care about, Hastings said. The advising privileges then pass to the next generation. But now we are seeing an increase in non-traditional uses, including corporations using them to fund their corporate philanthropy and employee matching gift programs; individuals or groups using them as a crowdfunding/giving circle; and the ultra-high net worth using them for their “giving while living” ethos, he said.

“We are also seeing a shift in how DAFs are funded. Donors are starting to use their illiquid and complex assets as gifts to their DAFs, which unlocks new types of assets destined for philanthropic purposes,” he said.

Other issues include:

  • Charitable sponsors want fundraisers to think of DAFs as an extension of a donor’s every day philanthropy. There’s no magic way “in” except to make a compelling case directly to donors with an interest in the mission. Good fundraisers can make it easy for donors to give from their donor-advised fund.
  • Donors are getting more sophisticated in their charitable giving. “We see them employing thoughtful strategies to maximize their charitable impact,” Hastings said. Donor-advised funds are one way for donors to ensure long-term giving across economic cycles.
  • Impact investments are making their way to DAFs and can offer donors a way to double-down on their charitable impact.