A (3:02)

Okay, which I want to talk about this because dafs as a vehicle has been fairly recent, has it?

C (3:08)

Not so common misconception, actually, the first DAF was created in the 1930s, so it is not a new vehicle. I would say what's new is really like the more wide and math adoption of the DAF as a tool for giving. The amount of assets in DAFs over the past 10 years has grown like 5x. So there's now over $250 billion in DAPPs. And there's the amount of grant making out of DAPPs has surpassed 50, almost $55 billion in 2023, and that's grown 6x in the last 10 years. So not a new vehicle, but really the explosion in activity and usage is what's new.

A (3:52)

Got it. Okay, before we get into these bigger questions about daafs, because I think there's a lot to explore here because a lot of folks don't know a lot about it, myself included. What are the ways in which people can access the resources and the assets in DAs? Because from my time as an ED, I remember generally like one of two ways. Like one, we would have a loyal donor who we would get a check from their family foundation and that's how they would give. Other times, just like a mystery check would appear out of nowhere. I'm like, I don't know who this is. I don't know where this came from. I don't know how this person found out about us. And so just let's start from the perspective of is there a way to prospect? Is there a way to find out who has a daft and perhaps start to build a relationship with the donor? Or is it. Or do you treat it more like an individual major gift prospect?

C (4:47)

Yeah, it's a great question and there's a lot to it because I think it gets down to the core question of daft. Fundraising is like, how do we get more of these funds? How do we get more of these donors? And the short answer is no, there isn't like a directory that you can go find like everyone who has a daf. And so because of that, I think the better approach is to make it really obvious and easy for people to both remember that about their DAF and to use it. So it's more about incorporating that into your communications, donor experiences, et cetera, and building a culture of that within your organization. That is the key.

A (5:29)

So what about, I don't know, like befriending the fund manager? Because that's something I've seen as well. I think obviously that works better if there's like a community foundation versus Fidelity. But is there anything to that in terms of just putting your organization on the radar of people who make these kinds of decisions?

C (5:48)

Yeah, I have a bit, maybe a little bit like less common advice on this topic and I would frankly say I read a lot of things that are bad advice in this area because it's the easy way out, I think for the recommendation to be, oh, just get to know the DAF provider and then build a relationship and then they're going to have all their fund holders will start granting money to you. Like, it just isn't actually how DAFs work. The majority of the time it is individual fundraising. And that's like the daft is as involved as the someone's bank is with them writing checks for their checkbook. It's unexaggerating, but it is, it's individual fundraising. And so like the real strategy is to do a good job fundraising from your donors and understand the way that they like to give and make that easy for them and approach the relationship that way. I will caveat like you did give a good example of have a financial advisor that you've got a connection with. Yes, obviously it's like good to build a relationship with them. If you do any type of fundraising or when they could have a table or participate in a peer to peer event, then they're going to fundraise from their clients. Which is great way to put like that. But that's again more like that's just relational and that's I think a good way to approach anyone who could have a network like a valuable network. Frankly, if you did want to intentionally go after someone that's more involved in DAP setup, like I think attorneys, like estate attorneys are actually some of the most involved in, particularly amongst wealthier donors and how they're thinking about setting up their different vehicles for giving so that'd be my top tip in terms of like prioritization. And the other thing is you brought up community foundations. I think that's an important exception to my general rule of don't reach out to Fidelity. Like they have a rule that they can't be biased towards specific organizations, so they're not going to be making specific recommendations to their clients. But I think at the community foundation level there's a smart way to go about it, which is if they apply to their open grants like their general direct grant making and then the program officer who is reviewing those applications and grants, you'll be on their radar regardless of whether you ultimately get that grant you applied for. And they often are the ones that are brought in when fund holders or even like a group of fundholders have questions about what's happening locally to deal with food insecurity. And they're like, hey, I actually know about five organizations doing X, Y, Z. And I think the community foundation DAF offering is they try to position themselves as more hands on where they'll give more advice and guidance. So that would be my feedback there.

A (8:33)

Cool. That's really helpful advice. And then just like a technical question, when people establish das, is there a minimum disbursement requirement that they have to meet on an annual basis or what's the disbursement policy?

C (8:47)

Yeah, there is no like universal IRS mandated disbursement policy. But at pretty much every DAF I've encountered, they have a policy internally. I think one of the more aggressive ones I've seen is from Fidelity charitable. Like after two years they'll start dispersing 5% of your fund if there's no activity happening. And others are like a three year inactivity rule. So it really just varies depending on the provider.

A (9:16)

Got it. Okay, super helpful. So the takeaway here is, folks, do not try to flood Fidelity or the Jewish Communal Fund or Schwab with your emails trying to get to know your fund manager. That's not going to work. Okay, let's jump into some other questions here. So I want to touch on. You said something about some misconceptions and can you walk us through some of the most common misconceptions about DAFs? Because I think again, because a lot of us don't know a lot about it, we make stuff up. So what are the biggest misconceptions that you've heard?

C (9:55)

I think most especially, most relevant to your conversations and audience is that it's just limited to major gifts. Like certainly is a favorite tool of large donors, but it is not limited to only that class of donor. And so I think having what that means for a fundraiser is to have a more collaborative approach to how they think about daft. Fundraising strategy at your organization shouldn't only exist and whatever gets like it can be very collaborative. And I would say the second misconception is that even if it is a very large donor, that they only use their daft to make mega gifts. When in fact your billionaires still have friends that run the marathon, right? And they want to donate to their page and they would always rather use their daf. Like I think that's an important thing to remember is once I've set up a DAF and I've put money or assets there, that's my preferred giving source always. Because it's like having a gift card, right? When you go into a store, you'd always rather use your gift card than have to pull money out of your own bank account, credit card, et cetera. Because it's, it's advantaged, you've optimized it and it's already committed. So that's like your fun giving money. And so it's a frustration to a major donor when they can't use their daft for all of their giving. And so they frequently do just give with a credit card instead of and they'll make a 250 gift when if they'd use their DAs, they would have given 5,000. And we see, I don't, I'm not just throwing those numbers out there. We see it all the time. And you have people make that calculus in their head. They're like, oh, I can use my dad, I give this much. But like, that's just how people with these funds think. And if they don't see daft giving like prominent or easy in those other experiences, they often are thinking, I can't use my DAF here. And I'm for those listening, I'm putting finger air quotes up because obviously you can use your daf. It's just a lot more steps and more process to deal with which inhibits giving.

A (12:00)

Yeah, that's such a good point that we should do everything we can to reduce friction for giving across the board, whether it's too many click throughs on your giving page or no def or by the way, crypto options, because I think that's a really interesting source of revenue. So that is another conversation for another day. But let's go back to trust. So here on nonprofit Lowdown, we love major donors, we love talking about major gifts. And one of the things that is central to really significant transformational gifts is the issue of trust. So talk to me a little bit about the mistakes that nonprofits make in when dealing with daft owners and the issue of trust. I think when you and I first spoke, I think you had the perspective that a lot of nonprofits are coming with a give me mindset versus a partnership mindset. So what are the things that nonprofits do that are really eroding trust amongst their daft givers?

C (12:58)

Yeah, it's. There's a few layers to this and obviously not all these are applicable to every organization. So I'm just providing examples. I would say the most common thing that I see, just misunderstandings internally about how dapps work and how the data's recorded can lead to pretty big lapses in stewardship. So if you're again back to how collaborative things need to be on this particular topic, if your Git processor or your Cager caging vendor, whoever is actually entering that check in your system, they might just see, oh, this is a check from New York Community Trust and file it as such and not put in any information about the donor. And so just making sure people are aware of that. I also think there's this fact, and I'll keep bringing up more misconceptions as they come to me, but a lot of people think of daft giving as like a way to give anonymously. And there may even be an assumption like if they, if I don't see an email, then they don't want to be contacted. When in fact, almost no daft gift will arrive with an email, some only an address if it's not being made through your own digital channels. With a tool like Daft Pay. I just think making sure there's awareness, understanding internally that these people do want to be thanked. You're already, you're like starting 10ft behind the start line because the gifts arrive days or weeks after they're made. So making sure you can get on that and thank them right away is key. I had a DAS provider tell me this is a few months ago now, but there was a specific donor who'd been supporting a local organization for three years, making five figure gifts each year. Never heard a thank you. And they reached out to their daft and they were like, please cancel my recurring gift. Like, I don't even get a thank you from them. And the DA reached out to organization, tell them just so you know, like some feedback. And they were like, we had no idea. We thought this was just from the community foundation. So I just think to that don't take for granted that people internally know about every. All these nuances about dapps can be really tricky. So I'd say stewardship is a really big one. Another one, it's like at the other end of the spectrum where organizations are familiar with dapps, sometimes I find the messaging can be confusing to people where there's certainly like a camp in the nonprofit space that is like pretty anti daft. They have a very like negative view, which we can get into more, but I'll just leave it at that, that they have a very negative view. And so sometimes the messaging about it can be from the perspective of the nonprofit. Hey, use your daf. There's money locked up there and you should be giving with it. And like that. When you bring up like controversy around DAFs with donors, it doesn't resonate with them whatsoever because from their perspective they're like, what do you. I took all these extra steps to set up a special account for giving so that I have the capacity to do more of it and you're gonna kill me. Or like make this accusation that I'm withholding funds because from the donor's perspective, they've taken a big step forward. They've committed part of their assets to giving in a way that's irrevocable. They can never take that money back. The only way they can ever leave the account is for grant making. And so I had to coach and counsel some nonprofits around their own messaging for daft fundraising in particular to be like, keep it positive. Like this donor views the formation of and use of their daft as like part of their identity as it's someone who gives back. So call to that and activate that as opposed to anything negative. So my two top tips from like a trust perspective.

A (16:42)

So Mitch, your earlier point about saying thank you. I'm like getting a little clemped over here because I have this like mortifying story to share and I'm. But I think it's illustrative of a point. We got this daft gift. It was a $5,000 gift from a first time donor. It was like a very generic name. It was like the like heart and like mind founding, like whatever. It was very generic. Right. There was no contact information. I think it came through fidelity, whatever. I think I may even contact you for telling me, like, can I get this person's information? I'd like to thank them anyway. I was like, fine, I will look on Google, found the foundation, sent thank you and all of the things throughout the year and then the next year rolled around and someone on the junior board said oh by the way the gift from the heart and whatever foundation was my mom and she's not going to give again because she never heard anything and it was the wrong freaking so I was sending information to like some random place in Maine because I had no idea so anyway all to say that I wonder just to play devil's advocate for a second because I'm with you obviously stewardship is important. Being grateful is important. But what do we do when there is a mechanism set up such that I I'm it's by design that I can't contact the person who made the grant.

C (18:11)

Yeah. Such a good question. There's so I talked about the we'll call it like lapse from the nonprofit perspective where they just didn't know. But there are a lot of instances where the there are instances where a donor wants to be anonymous. You get zero information whatsoever. In that case it is what it is like you can try and pass a thank you onto the DAF provider will be more successful if it's not one of the mega providers and will be more successful if it's a little personalized. So it's probably worth it if it's a much larger gift and they do make an effort to pass as long but if they do want to be anonymous it just is what it is. What happens way more those anonymous gifts are like 4% of DAF donations very small amount. What happens way more is limited information and typically that is a result of the portal like the experience where the donor is going logging in and like making their gift whatever the baseline like we are so biased to follow the bare minimum effort route in user experience and so many dapps are set up where the default setting is to share just the fundament or not share an email and so it requires it requires more just more work for them to share extra information and they don't even realize that they're you're not getting all the detail that they think you are. So that's that's frustrating because we don't have control over that. So I would say that's something I advocate for with our staff partners all the time and also our at chariot we have a tool called DAPA that we support organizations with and the I have confidence in this theory that not the donor that is causing this because our default within DAFA it's for name, email and address to be shared field and 95 plus percent of people checking out Check out, share. Because it feels like express checkout. You're used to it and you just move through it. So I think that's where a big opportunity is. Ways to address that that are in your control. And even your example is a really good one. I heard about a lot of success for putting up like a standing meeting with the fundraising team or maybe with some board members or junior board members once a month every other week, like whatever your volume necessitates or a channel in your slack. Or teams where it's just missing, like missing gifts or lost gifts and sharing something like that fun name. Your junior board member would have been like, oh, yeah, that's my mom.

A (20:44)

Or.

C (20:44)

Or someone else be like, oh, yeah, I was expecting a gift for $7,500 for X. I bet it's. I bet it's Melissa. Let me reach out to her again. Back to that collaboration piece. Like, everything keeps coming back to make this a shared function of the team and not just be on your shoulders.

A (20:59)

Yeah, that. That's such a good point. And Ashley, I'm not even sure had we looped everybody in, that would have been caught. But it just, it stands out of my mind as, like this moment of trauma. Like, I tried to do the thing and like, instead some random organization in Maine got all this mail for me. Who is this? Why are they sending us all these pictures anyway? Gotta get over it. Okay, so let me see. So let's talk about stewardship, because I do think that is a crux. And I'm on this. I will die on this retention hill. I think the first step is letting people know that the money was actually received. Here's the other question too, on that note. Is there a way for people to know if their donation wasn't received? Right. Because I think the other thing is if you're mailing a check, like, stuff gets lost in the mail, like there's no sort of tracking number. So what. What can be done in that regard?

C (21:55)

You're bringing up all the, like, hardest problems, Rhea. And that's like what we spend all day trying to solve the cherry. That's some of the fun of looking at it from a systems level, but Right instead because there's. It's oftentimes little that's in the control of an individual organization. And so many of these problems are systemic and require some, like, better infrastructure. So anyway, that's just what I spend all day long thinking about. But more specifically, in this instance, it is the problem that you don't know what you don't Know, as the nonprofit, you only know what arrives. And so I am like haunted by the thought of how many gifts it's like, out in the ether, like the inside scoop from working with so many daft providers. And we also support them now with the payouts process and like turning that into a more secure digital experience. But within the industry, like, a 10% failure rate of your grant payments is expected and standard and failure meaning, like the first attempt, like, you didn't have the right address. It got sent back, checked and cashed. So yeah, it literally keeps me up at night thinking about how many gifts are not getting to where they need to be. And from a donor's perspective, 100%. Like, side note, I think everyone listening to this podcast should get a daft. They're very accessible now. Like, the reason they've exploded is because all these providers have taken off any minimums or requirements. So get your own DAF account so that you can understand the experience from the donor's perspective. And that builds trust too, when you're talking to them about their giving. I think this just really valuable. I've seen it pay huge dividends for the fundraisers that we work with to be able to speak to that from a personal level. But you'll also see that you go into your portal, that you're all excited, right, that you're like supporting this organization to you and you're making gift and your normal experience that happens in the right scenario. You go on their website, you make the donation, you see a thank you page, you get something in your email, there's a drip campaign and you're like a part of it with a daft. You've clicked that button to send gifts.

A (24:01)

It's cricket.

C (24:02)

Nothing.

A (24:02)

I know it's.

C (24:04)

And so I just think if you can put yourself in those shoes also in your communications with donors around Dapps, say let us know or I don't know, just try to keep like more communication going with your supporters so that they don't. It's not going into the void. But otherwise, yeah, this is like what we're trying to solve by making it a part of like checkout on your website so that you do have insight that it was initiated. If it doesn't come that you now because that's something we experience. We've. By providing a way for donors to give with their daft on your website. It's like we've actually introduced a new problem for nonprofits to know about, which is, hey, that gift didn't arrive and they have to follow up and ask, oh, yeah, I went to the wrong address. So we're like, that's how I am so acutely aware of this challenge. And it's going to take a while to fully solve.

A (24:52)

Got it. Yeah. Well, listen, I'm glad it wasn't just me, right? Because I was like, hey, I was trying. It didn't work. Okay. So I think speed of acknowledgement, because I think you're right. When people give, they want to experience this afterglow. And if you're giving through daf, you don't get the immediate afterglow. You're like, I might be a couple weeks before they get the thing. And like, they might get back to me. They might not. I don't know. What are other ways that nonprofit fundraisers should be thinking about the stewardship piece vis a vis their daft givers?

C (25:24)

Yeah, I think look this up. I always want to caveat this with it's related to bandwidth. So take on what you can. It's like, we're going to throw a lot of suggestions out at you in this conversation. You don't need to do everything but do something like find the one step forward that you're going to take. Because, like, the right time to start thinking strategically about DAP giving was yesterday. And the second best time is today. So pick out what resonates with you. I think a couple of cool things that I've witnessed from a lot of organizations, really good data tracking is like the most important thing for stewardship. If you're. If you don't have established best practices for your team to follow for how gifts are entered, you will. No matter how amazing your stewardship plan is, it falls down every time. So I would say start there actually to and got resources on this that I like. Guides around data tracking practices. We do a report every year called the DAF Fundraising Report where We analyze over 100 million transactions this year in the 2025 report looking at DAF and non DAAP giving, which has informed our recommendations around DAF data tracking and best practices and ways to test it and improve it. So definitely check out that as a resource. But that's where I'd start. Huddle with your team around gift entry. Then when it comes to actual engagement execution, I think anything that you can do to show those supporters that you have noticed and appreciate the way that they give. So I've seen a client do a daft specific solicitation where they customize the actual daft that donor used. So the email said, we hope you'll be Able to use your. I don't remember the exact language, but you'll to be able. You'll be able to use your Fidelity Charitable DA to achieve XYZ goal. And I think as the donor, most people affiliate the language, the name of the provider is more resonant with them than the word daft. Like, I think if I use Fidelity as my daf, I think Fidelity Charitable as that is more resonant with me than the acronym. It's just like way more personalized and speaks to the donors. I think that's super effective. And there is DAF Day is coming up on October 9th. I think that's an awesome opportunity to try some of this stuff out. If you've never done any daft specific communication like you could for your donors that use a daf, it's like an appreciation email, right? Not even an ask. It's like this Daft Day's coming up. We know you've used your DAF before. Like, I think that just showing people you're paying attention. And then that also gives you a chance to do some like, broader education outreach to a broader segment of your donors doesn't have to be limited to just those using a daf.

A (28:09)

So I have a question which you may or may not know the answer to. But you know, when we look at giving overall from all the different sources, foundation, corporate, et cetera, et cetera, we see the vast majority of giving happens from individuals. And within that, there's an over index on major gifts or big gifts. Do you have a sense of how many of those gifts are coming out of DAFs versus people writing checks or other vehicles for giving?

C (28:37)

I have a hunch. Right. I don't have the definitive data, but we do have some good indications in one of the coolest things from this year's edition of the Daft Fundraising report was actually looking at the breakdown of DAC giving across donor levels, which was just fascinating. And so there's two ways to cut it. We looked at if you got a hundred daft gifts, how many of them came in each of these size buckets. And what may surprise folks is 69% of daft gifts in the study were below $1,000. That is fascinating, which is consistent with what we see in organizations using daft pay as well. And again, that's not necessarily an indicator of the donor's total size or capacity because oftentimes large donors for introductory gifts. Smart. Like you said, your $50 intro gift turns into. So that to me speaks volumes to the how varied the use of DAs are by whom and then what type of giving. But the other thing we could look at is, okay, across if you got a hundred gifts over $25,000, how many of them came through a DA? And I think the overall number was like around 30% the study.

A (29:52)

Oh, interesting, interesting.

C (29:54)

And then we looked at that kind of penetration metric at each giving level and some of the highest actually is in the mid level giving in that kind of 1 to 10k levels. So it is. And it has grown every. We also looked at the difference between 2020 and 2024 and growth in every single level of giving in the penetration of Dac usage, between 20 to 60% growth in that kind of four year change.

A (30:23)

Fascinating. I'm excited to dig into that report. Can we link it in the show notes? Is it publicly available?

C (30:29)

Absolutely, yeah, I'll send you the link.

A (30:30)

Last question for you. What is daft date? I don't even know what this is. Is it just like a celebration of dafs? Is it where people are encouraged to use their daft? Like what is this? Mitch?

C (30:39)

Yeah, all of the above. We started this last year. So this is the second annual.

A (30:44)

Okay. Because I was like, am I late to this party? Cause I've never heard of dapping.

C (30:48)

Yes. So this is the second year and it's. It is both of those things. Like at its core it is a giving day where people use their daps to support organizations and do in together as a collective because we're trying to move away from that experience we talked about, which is I go into my portal and it's crickets. Right. Like how can we drive more momentum and a collaborative collective feeling around DAP giving? But I think the nice part about it is it's inherently also awareness building because so many people don't know about DAPs. And so it's like the solicitation doesn't have to feel like yet another app. To your whole point about not just gimme gimme in donor communications, it's a chance to educate to. Yes, acknowledge if people have used a DAFT before. Share stories about donors that use a daft to give more to your organization. I think there's obviously an ask within any of that communications because it's Daft day. Keep us in mind. And so I think that's the perk is there's you're delivering value to your audience by informing them and educating about a tool that may be useful and raising awareness and driving an increase in giving on that specific day.

A (32:04)

Cool. So three takeaways that folks can do after listening to this one, I heard loud and clear. Make clear on your website and you're giving platforms that you do accept DAFs, right? And it sounds like there was a DAF pay that folks can utilize for that. Two, get with your team and align on how we're, how we're registering and acknowledging gifts. So for example, like I remember this very clearly. I had a, an intern doing data entry for me and they put in Fidelity Charitable not understanding that actually like they should soft credit Fidelity Charitable and they should credit Mitch Stein. And then the third piece, what would be a third takeaway that you would want folks to do after listening to this?

C (32:47)

Yeah, I think deadlines are awesome to actually affect change. So use staff day for all of those things. Right? Like I think it's, it is highlight those opportunities and say hey, and Daft days coming up on October 9th. Let's try to address these beforehand. I think it's just, it's helpful internally, it's helpful externally. Like just take, it's a shared moment for you to take advantage of for whatever you need at your organization.

A (33:13)

Cool. I love that. Mitch, thank you so much for elucidating so much. And I hope you do solve some of these problems because they are problems. I still think about that one thing and it gives me like heart palpitations to think that someone thought that I didn't acknowledge their $5,000 gift. It hurts me inside. So we'll make sure to put your information in the show notes along with Chariot and this daft study which I think I can't wait to get my hands on and dig into. But Rich, thanks for being on the show.

C (33:38)

Thank you so much for having me.

A (33:40)

It was good to see you.

B (33:41)

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