Managing the Tension and Finding the Right Donors

I’ve gotten some mixed reports from nonprofit leaders lately. Some are doing great – growing donations, donor lists, and engagement. Others are seeing drops in donations, reductions in major donor gifts, and an overall attrition of donors. Understandably, those experiencing a decrease in donations are looking for solutions.

In a podcast I heard recently, the speaker argued that leadership is more about managing tension than solving problems. Often, it isn’t so much that we are looking for the answer, but weighing options, balancing costs and benefits, and discerning the best course.

While I don’t have a magic bullet, I do think we can manage the tension we’re seeing in charitable giving. Where can you look for donors consistently committed to generosity in times of uncertainty?

As you prepare for fourth quarter and year-end giving, consider engaging specifically with donors who use donor advised funds (DAFs). Giving to donor advised funds continues to increase and grants out of DAFs have also been going up. That provides an opportunity for nonprofit leaders to focus on DAF donors as an important segment of donors with capacity to invest meaningfully in the work.

A DAF is also a great tool to share with donors to assist them in their generosity journey.

3 ways a DAF helps donors give better:

Bunching Tax Deductions

Bunching charitable tax deductions through a DAF helps a donor increase their generosity and flexibility in the long run. They can maximize tax benefits by donating two years’ worth of charitable contributions to a DAF within one year, itemizing deductions for that year, then taking the standard deduction the following year. The funds can still be paid out of the DAF annually.

Here’s a resource that can help donors understand bunching.

Strategic generosity

Donors can utilize a DAF to be more strategic in their giving. They can donate to the DAF when it makes most sense, then make a thoughtful decision about what nonprofits to support. The Signatry encourages families to utilize a DAF as a tool to discuss the causes and organizations they want to invest in charitably. This helps a family live out their values.

Donating nonliquid assets

A DAF positions a donor to utilize a variety of assets for generosity. 90% of America’s wealth is in assets outside of cash—think stocks, businesses, or real estate. Yet, 80% of giving is in cash. If nonprofits really want to help donors steward their resources well, sharing the opportunity to give these assets before they are sold is key. It could help them save on taxes and give more to the causes they care about. Want to share with donors more information about giving assets? Learn more here.

Nonprofits have an opportunity to be a resource for donors. As leaders are better equipped with tools and information to meet donors’ needs, they will differentiate themselves and add value to the donor relationship. At the same time, seeking these tools—and the donors who use them—can help leaders manage the tension they feel by connecting with donors who are ready to give.