Although seven in ten nonprofits have received a grant from a donor-advised fund (DAF) in the past three years, negative perceptions of and confusion about DAFs remain, a report from the Indiana University Lilly Family School of Philanthropy at IUPUI finds.
Based on a survey of nearly four hundred and fifty nonprofits, the Schwab Charitable-funded report, Nonprofits and Donor-Advised Funds: Perceptions and Potential Impacts (48 pages, PDF), found that 58 percent of respondents had received a grant from a DAF in 2019, up from 46.6 percent in 2018 and 50.3 percent in 2017. And to date in 2020, 33.9 percent had received a grant from a DAF, with nearly nine in ten (87 percent) of respondents that had solicited grants from donor-advised funds in the past three years having received one, as had 42 percent of organizations that had not actively solicited DAFs. The survey also found that 52 percent of organizations that had received a grant from a DAF and 30 percent of those that had not saw the larger grant amounts often awarded by DAFs as a positive factor, while 65 percent of recipient organizations and 47 percent of non-recipients saw the ability to reach wealthy donors as an advantage of DAFs.
According to the survey, respondents whose nonprofit had received a DAF grant in the last three years were more likely than non-recipients to express positive views about soliciting DAFs and the administrative burden of processing those grants (20 percent vs. 7 percent). At the same time, more than 60 percent of respondents indicated having some level of concern with the lack of donor contact, while more than half cited concerns about unclear donor requests. According to the report, 52 percent of DAF recipient organizations had received an anonymous grant, while 31.9 percent of respondents expressed concern over transparency issues.
"As the popularity of DAFs continues to grow, the challenges nonprofits face when working with DAFs will continue to be an important conversation in the philanthropic sector," the report's authors conclude. "With the political, social, and economic crises and changes that have inundated 2020, it is highly likely that the fundraising landscape and the nonprofit sector overall will be permanently affected. DAFs will likely continue to play an increasingly important role in nonprofits fundraising going forward."
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