#403 - DAF Donor Targeting Playbook

For some of us who are not familiar with the term DAF.

So DAF stands for donor advised fund.

And the easiest way to understand this is simply thinking about this like a checking account that people designate for philanthropic contributions.

Openness funds will be set up via institutions like Fidelity or Charles Schwab or local community foundations.

The thing to know about DAFs, though, is that the minute somebody opens a DAF, they no longer have control over the money.

And so the mechanism is that once they open the DAF and they get their tax benefit, that DAF is owned by the institution in which it's open.

And the donor can then recommend grants to nonprofit 501 of their choosing.

A lot of people get confused about is the DAF donor gets the tax deduction the day the money goes into the fund and they may grant to you later.

When they grant to you, there's no tax consequence for them.

Which means that messages around get your tax benefit or your tax deduction in before the end of the year simply does not apply to your DAF donor.

Because to them, February and December are the same day in terms of the tax benefit.

She's already gotten her tax benefit.

She doesn't need December 31st as an artificially manufactured deadline for her.

Now, the reason that this is relevant to you is one, when we think about major donors are gifts of assets, not of income.

And one of these assets can be a DAF.

When somebody is considering giving a grant to you via her DAF, you're not actually competing with the household budget.

This is not the person who's thinking, if I give a charitable gift this year, it'll be less money for my family.

No, because she's already set this money aside.

It's already invested.

At this point, she's already made the decision to set the money aside.

The only thing now she needs to decide is who will be recommended for a grant.

Now, the other things to know that are very important via DAFs is that there is no law or requirement to force the money out.

So in other words, unlike say an institutional foundation, there's no requirement that the A percentage has to be paid out every year.

There's no requirement that it has to be dispersed in a certain amount of time.

So in theory, somebody could open a DAF and just let it sit there till the end of time.