There’s a difference between being charitable and being generous.
Recently, I read in an article that donor advised funds, or DAFs, primarily appeal to wealthier donors who have “disposable dollars to devote to charity.” [emphasis added] If that were the case, perhaps DAFs would not be very useful resources for nonprofit leaders to share with their donors.
Generosity is Central
However, at The Signatry, we engage with donors across the spectrum of resources to open DAFs and send out grants to nonprofits. By and large, The Signatry’s donors don’t view their gifts as “disposable dollars.” Most prioritize giving above other comforts and luxuries because of the call to biblical generosity.
Therein lies the difference.
This is not just a matter of linguistics. It’s a matter of the heart. Our donors are not interested in charitable contributions as an afterthought; they are striving to live generously with all they have.
“… for all that is in the heavens and in the earth is yours. Yours is the kingdom, O LORD, and you are exalted as head above all.” 1 Chronicles 29:11b ESV
When donors see their balance sheet as God’s resources that they are entrusted to manage, things change. Charitable dollars are not disposable, they are indispensable tools for building the Kingdom of God.
What does this mean for nonprofits?
Donor advised funds are the fastest growing philanthropic tool, receiving 15% of all charitable giving in 2020. For many Christians, DAFs provide opportunities to maximize what they are able to give each year. Those generous donations can, in some cases, multiply within a DAF.
At first glance, nonprofit leaders may see DAF sponsors as competition or, at best, a middleman. However, skeptics are wise to take a second look.
DAF donors are important to nonprofits. Here are three reasons why nonprofits should focus on these generous donors and consider how DAFs can be a resource:
1. DAF donors have decided ahead of time to be generous.
DAFs hold wealth that is set aside for charitable purposes. There has been record growth in assets held in DAFs. That means nonprofits have an opportunity to make a case for a growing investment in their work.
2. DAFs enable strategic giving.
Ninety percent of all wealth is in assets other than cash. A DAF can facilitate gifts of those assets from a donor to a nonprofit, even if the nonprofit is not otherwise set up for complex gifts. Donors can give more efficiently and significantly through gifts like stock, real estate, and closely held business interest by using DAFs as a resource to support nonprofits.
3. DAF donations are consistent – and growing.
Donors are recommending more grants from DAFs – across economic cycles and geopolitical uncertainty. In 2020, we saw increased generosity from DAFs. Nonprofit leaders are wise to make a bold case for support amidst the economic uncertainty in 2022 as well.
The Signatry partners with donors who aren’t just considering where to put their disposable dollars for charity. Instead, they have committed to a life of biblical generosity and are seeking wise investments for God’s resources.