Donor retention rates for both new and renewing donors remain pathetically low and, actually, continue to decline. There are a number of reasons for this, many of which I’ve addressed in previous posts. However, just recently, I learned of a situation I had not considered previously. So, I want to make sure you’re aware of the problem and understand how to easily fix it.
I heard about the problem from The Whiny Donor, a thoughtful donor who uses Twitter to generously provide fundraising professionals with feedback and insights from a nonprofit-contributor’s perspective.
In December, we gave through our DAF to several nonprofits that we had supported for many years with direct donations. I suspect several of them won’t have the capacity to make the connection, and will now consider us lapsed donors.
— The Whiny Donor (@thewhinydonor) January 26, 2019
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The Whiny Donor wrote, “In December, we gave through our DAF to several nonprofits that we had supported for many years with direct donations. I suspect several of them won’t have the capacity to make the connection, and will now consider us lapsed donors…. Which means they will change the way our relationship moves forward. They will think we didn’t support them; we will think we have. It’s a stewardship conundrum.”
As a philanthropic tool, Donor Advised Funds offer people a number of financial advantages compared to giving directly to nonprofits or not giving at all. At the end of 2018, we saw significant growth in the number and size of DAFs, in part, as a result of the new tax code.
While donors can benefit in a variety of ways from using a DAF to realize their philanthropic aspirations, the use of DAFs can create a stewardship challenge for charities:
- Should the charity thank the DAF or the individual supporter?
- Who should the charity continue to steward, DAF or individual?
- How should the charity track and report the donation?
- Does the charity’s software help or hurt these efforts?
The Whiny Donor worries that charities will recognize the DAF and ignore the role she and her husband played in securing the gift. She fears some organizations will assume she has abandoned them when, in fact, she has not.
This is a very real concern. As DAF giving becomes more common, I’ve heard many examples of how nonprofit organizations have stumbled. Some thank the individual, but not the DAF. Some thank the DAF, but not the individual. Some thank both the individual and the DAF. Some don’t thank either or thank in the wrong way.
Here’s what you need to know: The DAF is the donor. The individual is not the donor when the gift comes from a DAF. Because of the way DAFs are structured and the laws regulating them, individuals can only make a contribution recommendation to the DAF administrator (e.g., Fidelity Charitable, National Philanthropic Trust, Schwab Charitable, etc.).
Because the DAF is the donor, you should thank and send receipts to the DAF. However, as The Whiny Donor suggests, that’s not good enough. You should also thank the individual who recommended the DAF gift.
However, when thanking individuals, be sure to thank them properly. Do not thank donors for their donation. Remember, they are not the donor. Instead, thank the individual for recommending a donation from the DAF. In this context, sending an individual a gift receipt is meaningless, so don’t do it.
After you thank an individual for recommending a DAF donation, continue to recognize the person as the loyal, generous supporter they are. Provide the individual with all the stewardship you would have provided them if they had made the gift directly from a personal checking account.
I realize this can be a bit tricky from a gift administration perspective. Fortunately, most fundraising software packages will allow you to link a DAF record with an individual record. Some supporters will wish to remain anonymous and, therefore, the DAF administrator will not tell you who the individual is. However, that’s seldom the case. Most supporters will want to retain a relationship with your organization, and will instruct the DAF administrator to supply you with their contact information. Take full advantage of that. Do not disappoint your organization’s supporters.
On rare occasions, some DAF administrators will withhold the individual’s name unless the person specifically instructs the company to pass along their name. This means if an individual does not express a preference either way, the DAF company will withhold the name.
When working with your supporters, remind them to notify their DAF administrator that they would like their contact information forwarded to you when the gift is made. If you receive a DAF gift without an individual’s name attached, you can contact the DAF company. The DAF administrator might give you the name of the individual assuming the person has not requested anonymity.
When donors shift from writing personal checks to making DAF contribution recommendations, they are still loyal, generous supporters of your organization. Treat them that way, especially if you want them to continue supporting. They have not abandoned you; be sure not to inadvertently abandon them.
What challenges have you encountered when handling DAF contributions?
That’s what Michael Rosen says… What do you say?
Michael Rosen Says... 