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In this month’s HigherEdCareers interview Andrew Hibel interviews the founders of Half My DAF who shed light on what a Donor-Advised Fund (DAF) is and why we should be taking a closer look at DAFs. As many nonprofits have been hit hard by COVID-19, Half My DAF has encouraged people to put their charitable dollars to work and has raised awareness of the over $120 billion sitting in more than 700,000 DAFs. Thus far, Half My DAF has helped move over $5 million from DAFs to over 400 nonprofits.
Andrew Hibel, HigherEdJobs: The FAQ on the Half My DAF website offers an extremely detailed description of Donor-Advised Funds (DAFs) and an evaluation of their pros and cons. Can you summarize the FAQ and explain what a DAF is and why they are both popular and, at times, controversial?
J. and D. Risher: A Donor-Advised Fund (DAF) is a giving vehicle administered by a charitable sponsor such as Fidelity, Schwab, Vanguard, or a community foundation. Putting money into a Donor-Advised Fund is like opening a charitable checking account.
DAFs make life easy for donors, which certainly increases charitable giving. People get a tax break when money is deposited into the fund, then have time to think through their giving. That’s the glass-half-full way of looking at them: they make giving easy, and almost certainly have increased total giving.
But there is no payout date, urgency, or incentive to move money from a DAF to nonprofits. Even though money in a DAF is irrevocable and cannot be returned to the original donor, too often money remains in these funds due to inertia, the “paradox of choice,” or a sense of maintaining control over the assets. That’s the problem: they can be seen as draining money from the non-profit and government sectors, since the donor has already received a tax break but never needs to grant out the money.
Hibel: There is over 120 billion dollars in DAFs. David, you wrote a great LinkedIn post in January encouraging people to make grants from their DAFs they funded in 2019. After the pandemic hit, the two of you launched Half My DAF. Can you explain your motivation for launching this program and what your goals are for it?
D. Risher: I run a nonprofit called Worldreader which offers digital reading programs to keep kids learning. Like many nonprofits, we were hit hard by COVID: all of a sudden, fundraising came to a halt, even as the need for our work increased.
So, Jen and I set a goal for ourselves not just to help Worldreader, but to inspire more giving overall. We wanted to encourage people to put their charitable dollars to work and to raise awareness of the over $120 billion sitting, unused in more than 700,000 DAFs across the country. So far, #HalfMyDAF has helped move over $5 million from DAFs to over 400 nonprofits.
Hibel: Jennifer, you expressed the common challenge of “now what” for donors who use DAFs when you established your first DAF in the early 2000s. What are your best suggestions for donors who are looking to use their DAFs?
J. Risher: If someone is unsure where to give, I encourage them not to get too tangled up doing research or to do giving perfectly. There is no one right way to give. Giving is personal and an expression of values. Talk to friends or family members about their giving. Just hearing others’ approach could help you get clearer about your own. Your financial advisor or a philanthropic advisor could be of help too. Ask them to recommend a few nonprofits that speak to your interests.
Then, don’t be shy about calling a couple nonprofits and talking to people to hear what they are doing. Remember, they’re just people. You could also join a giving pool like Social Venture Partners. The more you practice giving, the more muscle you will build and the more satisfaction and joy you will find.
Hibel: In my opinion, many nonprofits misunderstand the DAF. Their ability to work with DAFs is often tied to the size of their budget where the elite financially stable organizations either sponsor or are conversant and the financially at-risk organizations are not able to do either of those things. You’ve produced an excellent video for nonprofits who want to learn about DAFs. David, you founded and run an amazing nonprofit so you have first-hand experience as the fundraiser as well. What’s your advice to colleges and universities who are looking to better incorporate DAFs in their giving programs?
D. Risher: Donor-Advised Fund holders should be of particular interest to colleges and universities because DAF holders have both charitable intent and resources to give. Two keys to tapping into DAFs is knowing which donors are giving from DAFs, and making it easy for these DAF holders to give from their DAFs.
First, keep track of DAF donors in your donor database. Look for checks from DAF sponsors like Fidelity, Schwab, or community foundations, and reach out to them with the intent of cultivating a deep, long-term relationship.
Second, consider including a widget from DAFDirect on your website and in solicitations. It’s available here: https://www.dafdirect.org. Making giving easy always results in more giving.
Hibel: Individual fundraisers often shy away from conversations with donors when they bring up their DAF. How do you suggest a development officer lean into a conversation with a donor about DAFs rather than shy away from it?
J. and D. Risher: Fundraisers should always lean in and build relationships with donors, and that includes speaking their language when it comes to giving. Again, Donor-Advised Fund holders are especially important because a DAF is an indication of charitable intent and resources. Traditionally, DAF holders are over 50-years-old, but over the last several years, DAFs have become more widely used by younger donors, meaning that you have the possibility of forming a very long-term relationship.
Ultimately, building strong relationships with every donor is what keeps them coming back. Treat DAF donors as individuals. Get to know them. Make sure they feel good about you, your organization, and the impact their gift is making.
Hibel: On July 15, Half My DAF awarded $600,000 in grants to 147 nonprofits. Can you share more about the grants and their overall impact?
J. and D. Risher: By mid-July, #HalfMyDAF heroes had donated over $3 million to 310 nonprofits and made a total of 341 grants ranging from $50 to $400,000. The top categories were education, justice & equality, general community support, religious community support, medical, environmental, food security, and arts & humanities.
On July 15, #HalfMyDAF awarded a total of 147 nonprofits with $600K in matching grants, 31 of which received $10K or more.
Hibel: The pandemic has affected people very profoundly. Your efforts have been a meaningful response. How has it brought meaning to the two of you?
J. and D. Risher: The #HalfMyDAF challenge has been incredibly rewarding. For one, the $1 million we offered in the form of matching grants has inspired five times that amount of giving. By mid-September, over $5 million had been given to over 400 nonprofits through #HalfMyDAF. In addition, we’ve also had three donors join us on the matching side, allowing us to increase our initial donor pool from $1 million to $1.4 million.
We’ve gotten a positive reaction from the press as well, with articles in The San Francisco Chronicle, The Washington Post, The Chronicle of Philanthropy, NPR’s Marketplace, and more. Best of all, both nonprofits and donors are truly grateful for the challenge. Nonprofits appreciate the donations and the matching grants as well as the learning we’ve facilitated through webinars on Donor-Advised Funds. Many #HalfMyDAF heroes have told us that the challenge is the nudge they needed.
Most gratifyingly, we’ve heard how people are sitting around the dinner table with their adult children, talking about their values and where they want to give, having conversations about money that they wouldn’t otherwise have had. Ultimately, generosity creates more of the same and we feel grateful to be inspiring others to give.
Hibel: Both of you have had careers at some of the most innovative companies in the world, where dynamic change was intended to be part of the experience. Based on that, what is your best career advice for higher education faculty and staff at this incredible moment in history?
J. and D. Risher: This may sound counter-intuitive, but we’d recommend that whatever that professional itch is you’ve been waiting to scratch, now’s the time to scratch it. If there’s any good news at all about COVID, it’s that it has given people and organizations license to take risks. At Worldreader, I’ve seen partner organizations make decisions that might normally take years in just weeks — the decision to promote our reading app on one of the world’s largest cell-phone networks, for instance, to help more kids read. That’s true for career-changes as well: strong organizations are hungry for talent who can jump in and get to work. If you’re lucky enough to be able to make a big-risk / big-reward move and have the security to do so, now’s your moment!