Tal Frankfurt is the Founder and CEO of Cloud for Good, a Salesforce partner that creates transformational value with technology.
In recent years, donor-advised funds (DAFs) have emerged as a growing and flexible method for philanthropic giving. Traditionally popular among high-net-worth individuals and families, DAFs have the capacity to create lasting social impact. Thanks to technology and digital platforms, access to DAFs has expanded for a wider spectrum of donors—regardless of wealth or background—transforming giving experiences and how philanthropy operates in this day and age.
What Are Donor-Advised Funds?
DAFs are unique philanthropic accounts in which donors can make a charitable contribution (cash, stock or other assets), receive an immediate tax deduction and then recommend grants to qualified nonprofit organizations over time. While traditionally associated with high-net-worth individuals due to their flexibility and favorable tax treatment, DAFs can benefit donors of all financial backgrounds. Still, barriers to entry—such as minimum contribution amounts and limited accessibility—have created a “generosity gap,” hindering wider DAF adoption among middle-income individuals and smaller donors.
The Role Of Technology In Expanding Access
Digital Platforms Democratizing Philanthropy
Looking to help break down those barriers, fintech and philanthropic organizations with digital platforms are increasing access and opportunities to use DAFs. This is accomplished by reducing processing fees, limiting administrative burdens and simplifying the grant recommendation process. Organizations like Schwab Charitable and Fidelity Charitable have led the way in streamlining DAF management, providing intuitive interfaces that allow donors to manage their charitable contributions. Innovative startups are also making DAFs more accessible to a broader range of donors by lowering minimum contribution thresholds. Groundswell, for example, allows DAF-issued contributions as low as $1, whereas traditional DAFs often require $25,000 or more.
AI-Powered Insights And Giving Experiences
AI’s ability to analyze data and generate data-driven insights about a nonprofit’s supporters, donor preferences, and past giving patterns or history has helped nonprofits build more personalized donor relationships, successful fundraising appeals, and even suggest relevant causes and nonprofits that align with their values and interests. For DAFs, AI has the potential to similarly innovate and transform the DAF-giving experiences. One organization, TIFIN Give, has a fully digital AI-enabled platform that provides its customers with a simple, intuitive and flexible giving experience that enhances and modernizes traditional DAFs and other charitable giving structures. By innovating and streamlining DAF giving experiences, AI can help encourage increased adoption of DAFs as giving vehicles.
Mobile DAF Solutions For Modern Donors
The rise of mobile platforms has significantly changed the way donors interact with their charitable funds. For many, the ability to recommend grants or make contributions directly from a smartphone is a game changer. These platforms allow donors to manage their DAFs seamlessly, wherever they are, on the go. Mobile access is a key driver in expanding the reach and adoption of DAFs, especially among younger generations who prefer digital solutions for financial management. Daffy is one example of a mobile DAF app that makes DAF giving on the go easy.
Blockchain Increasing Transparency In Giving
Charitable giving has become a more transparent process through blockchain technology, and some DAF platforms, like Endaoment, have adopted blockchain to reduce concerns over where funds are going and how they are being used. Blockchain technology tracks a donation from the moment it leaves the donor’s account to the moment it reaches the intended charity. This transparency is particularly valuable for donors who prioritize accountability in their philanthropic efforts. It can also increase trust in the giving process and help encourage first-time donors to take advantage of DAFs.
Making Your Nonprofit More Accessible For DAFs
While financial and philanthropic advisors play a great role in encouraging DAF giving, nonprofits also have an influential role in the DAF giving experience. Here are my top three tips for how nonprofits can be more accessible to DAFs:
1. Educate And Engage With Donors About DAFs
Creating awareness about DAFs is an essential step nonprofits can take to address questions donors have about DAFs and secure more DAF gifts. Nonprofits can create and run DAF-specific campaigns and appeals to their supporters or make a dedicated page or section on their website that educates donors on what DAFs are, their benefits and how donors can use them to support their cause. They can also recommend that their donors use innovative, modern DAF providers that are committed to expanding access to DAFs and improving the DAF giving experience.
2. Leverage Embedded Or Integrated Digital DAF Giving Solutions
Nonprofits can help increase DAF giving to their organization by incorporating digital DAF giving platforms or apps that provide an embedded DAF giving option or can integrate with digital platforms that support DAF giving. This will not only make it possible for donors to make online DAF contributions directly to nonprofits but also make the DAF giving experience more seamless and convenient than traditional DAFs. DAFpay is one such digital solution that enables an embedded DAF giving option online. A leading online giving platform, Classy, is offering a DAF integration to simplify and expand access to online DAF giving.
3. Utilize A CRM To Better Track And Manage DAF Gifts, Donors And Relationships
Regardless of whatever fundraising tool a nonprofit uses for DAFs, nonprofits should use a modern CRM system like Salesforce for tracking DAF gifts and capturing donor information. Modern CRM platforms often come with innovative tools like automated communications that can be used to thank DAF donors in a timely and personalized manner or donor management tools powered by intelligent analytics that can help nonprofits understand their DAF donors better and cultivate deeper donor relationships.
By expanding access to DAFs and enhancing the way they are used, technology is helping to deliver transformed giving experiences with DAFs and creating a more modern, accessible and inclusive philanthropic landscape that empowers all donors. As we look toward the future, the combination of tech-driven accessibility and customer-centric giving vehicles will help DAFs fulfill their potential as powerful tools for social good.
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