Myth About Anonymity
Last month, while attending a panel on DAF at AFP ICON in San Diego, I had a realization. At one moment in the session, we in the audience were asked to talk to the person next to us about… I don’t remember the question, but it doesn’t matter. The point is we were talking about DAFs, and the veteran fundraiser I was speaking with started by saying how she knew donors used DAFs because they wanted to be anonymous. As a longtime DAF account holder, I immediately identified myself as a DAF donor and told her that anonymity is not the primary reason most people use DAFs. (If they do want to be anonymous, there’s a very expensive DAF program just for them).
Note that DAF donors, in most cases, have an option (opt-in) to give their gift anonymously if they want. Most don’t tick that box. Again, anonymity is usually not a reason for someone to open a DAF account. The misconception around anonymity turns out to come from somewhere else entirely.
Why People Actually Use DAFs
Most DAF donors use them because they’re quick, easy, and they offer a degree of protection that direct giving doesn’t offer. They reduce tax-time and administrative stress by providing a single place to track giving. And a DAF donor can make a gift in about 30 seconds total.
And yes, they also offer a great way for donors to use a financial windfall (including a bonus, appreciated stock, etc.) to commit a chunk of that money to charitable giving - and to take a breath so that they can make an intelligent decision about which NPO(s) they want to support. Which means nonprofits should focus less on finding DAF donors and more on removing friction for people who already want to give.
Biggest Nonprofit Mistakes
When you receive gifts from DAF donors, be sure to log them as such, even if you only have the name of the DAF account. We now know why many fundraisers mistakenly believe that DAF donors are, and choose to be, anonymous, and this helps explain the misconception mentioned earlier. I found out at AFP that a typical gift processing scenario goes like this:
Checks/payments come into the nonprofit organization.
Checks/payments only show the name of the DAF account at the top, and that name might be the name of a trust.
Often, there is no address or phone number provided - only the DAF sponsor’s information.
Systems at the nonprofit don’t see the information needed to put the “person” into their system, as there’s no address or phone number, so the donation is put into the anonymous category. And that’s why this idea that DAF donors want to be anonymous comes from. That also might be why many DAF donors don’t receive a thank you from the organization they supported.
But donation processing problems are only part of the issue.
In most cases, DAF donors have an option (opt-in) to give their gift anonymously if they want. Most don’t tick that box. Again, anonymity is usually not a reason for someone to open a DAF account.
Practical Fixes
It seems that every nonprofit fundraiser I know wants to find out how they can access the people who have DAF accounts. If you’re hoping for a master list of DAF donors to solicit, you’ll probably be disappointed. As I discussed in my book Philanthropy Revolution, most DAF sponsors aren’t in the business of getting you those names, even though many DAF donors would likely welcome communication from nonprofits they’re interested in.
But nonprofits can make themselves far easier for DAF donors to support and here are some quick and simple ways to do just that:
Be sure to have clear messaging on your giving page(s) that clearly states, “we welcome DAF gifts” (or something similar).
DAF donors only need a few pieces of information to fill out their forms to request a donation be sent: they need your Tax ID#s, your mailing address, and ideally, a contact person and phone number for your organization.
Do not force donors to call or email you to get the information above. That’s unnecessary friction, and donors will move on.
When a donor wants to advise a donation from their DAF fund, they need to fill in the registered name of the nonprofit, and, ideally, that nonprofit’s address, phone number and contact person. But what happens when a donor sees 12 organizations that sound like the one they want to do donate to? How do they know which one to choose? (Hint: this is where it’s critical to have the correct information on your website/solicitations. But read on.)
If the information - especially the nonprofit’s name - is different on the solicitation materials than it is in the pop-up database, or if the address is in a different city than the donors through the nonprofit was based in, the donor might bail on the whole thing. Donors need to trust who they’re giving to (or advising on giving to) and if it’s going to take time to figure which of the 12 names is the correct one, they’re likely to give up. Will they call the number on the website or send an email? Usually not. This is an example of unnecessary difficulty - or friction - that will drive a donor away. So nonprofits need to ensure their organization’s information is current in the Guidestar/Candid database and clearly accessible on your website and any of your solicitation materials.
At APF ICON, I ended up meeting three wonderful fundraisers who had been in the DAF session, and we decided to do a test. (I wanted to demonstrate how quickly a DAF gift can be made from a phone.) Each of the three fundraisers, one at a time, gave me the name of their nonprofit. For the first fundraiser, at least a dozen similarly named organizations appeared. When we found the correct one (legal name vs. name actually used), I was not able to confirm that we had the correct one because the address and contact person were incorrect.
Tools/Platforms
If this still feels overwhelming, there are tools that can help. With the dramatic growth of DAFs in the US (and abroad!), several companies have entered the sector to facilitate DAF giving, and even though it won’t fix everything I’ve listed above, it will definitely help to make your DAF acceptance program easier and frictionless for you, the nonprofit. These include: Chariot/DAFpay, DAF Direct, Daffy, DAFwidget (from MarketSmart), and DAFtech, among others. In addition, many of the existing donation processing platforms have or are incorporating DAF functionality into their product. Note that these don’t all address the same customer or issues, but the good news is that there are options out there.
None of these fixes are especially difficult. But together, they can dramatically reduce friction for donors who are already inclined to support your organization. As DAF giving continues to grow, nonprofits that make the process easy will have a clear advantage.
I hope this was helpful. There’s a lot of info out there about this subject and the best way to understand the mysterious world of DAFs is simply to open your own account. In the meantime, here’s a great article from National Philanthropic Trust on DAFs that’s well worth reading. It’s also definitely worth checking out the great reports from Chariot, and hot off the press is a new report from the Donor Research Collaborative.
Final note: I and my family (including kids) have had our own DAF accounts for about 15 years. If you want to know about my personal experience with DAFs (as a donor), ping me here. Once we hear from you, we’ll be sending you a free gift.
See you in the next edition of Burning Questions.
Inspired by Fahrenheit 451, the classic novel about a world where books are burned to suppress ideas, Philanthropy 451 is about igniting the opposite — sparking bold conversations in a field that too often avoids them. Philanthropy shouldn’t be on fire for the wrong reasons; it should be burning with curiosity, honesty, and change. This newsletter is a place to challenge assumptions, question outdated norms, and reimagine what giving can be when we’re not afraid to turn up the heat.
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I recently did an informal query among family friends, asking how many have DAFs. Many fif but had completely forgotten about them. Without suggesting any particular organizations, I simply told them about the realities the sector is facing right now, the challenge with moving those funds towards any cause without their nudging the DAF hosts, and options for ensuring causes they say they care about benefit from some of this untapped resource base. Many of them fired off emails or support tickets to their advisors within 24 hours of me raising the issue. 🙂
I'm still not a fan of these instruments. But I also don't deny their power and value especially now. The trick is unlocking them while also being on the radar for the folks who actually release the funds. Groups that are not making themselves visible and vocal and accessible are not going to benefit. At the same time, we need to literally remind donors how to make sure these things can actually be used.