Fundraising data for years has shown the number of donors declining even though revenue increased more often than not. However, new albeit limited data shows donor-advised fund (DAF) users bucked the trend.

Data from a new study shows the number of DAF donors increased between 2019 and 2022. During 2023, however, 25% of organizations studied had slightly fewer DAF donors than the prior year, while 75% had declines in the number of non-DAF donors.

The change in total number of DAF donors remains meaningfully less than the change in number of DAF gifts because a significant portion of DAF donors make two or more gifts per year. And, if a donor had given an organization $1,000 via credit card, but in 2022 gave with a DAF for the first time, their annual support increased to nearly $2,000 per year thereafter.

The data is from 20 nonprofits across eight states compiled and analyzed by fundraising agency K2D Strategies and fundraising platform Chariot. Participating organizations were asked to securely upload historical individual giving data for five years, with any donor names or personally identifiable information masked with unique donor IDs. This process allowed the comparison of DAF and non-DAF giving for the same donor, to the same organization over time.

Charities were invited to participate and then were selected based on the completeness of the organization’s data, explained Karin Kirchoff, founder and president of K2D Strategies. Data collected included: Donor ID, Gift date, Gift amount, Channel (mail, digital, events, other), Gift Type (DAF or Non-DAF), Restricted or Unrestricted, and the if using a DAF, which provider (Fidelity, Schwab, Vanguard, NPT, etc.).

No individual organization’s data was shared with any other participants, and any details about specific organizations disclosed in the report were approved by the participants, according to Kirchoff.

There’s long been a concern that DAFs lead to decreased support of operating nonprofits, according to the study’s authors. The data shows that there is substantial benefit to a nonprofit when their current supporters start using a DAF instead of other means of giving. The study data shows that for these organization once someone starts giving from their DAF, their annual giving increases by 96%.

DAF revenue made up shortfalls for two organizations in the study, said Mitch Stein, head of strategy for charitable payments company Chariot. In one case, he said, there was a $300,000 decline in giving from non-DAF donors and a $425,000 increase from DAF donors.

According to the authors, DAF revenue is growing 214-times faster than non-DAF revenue in the sample group. The median four-year (2019-2023) percentage increase in DAF fundraising revenue was just 1% for non-DAF revenue.

If an active donor file had 10,000 non-DAF donors in 2019, it’s likely 600 have been lost by 2023, based in the data from the 20 nonprofits. But, if there were 500 DAF donors in 2019, there would be 895 in 2023 making 19-times larger gifts than non-DAF donors, on average, the authors said of the data.

Total DAF revenue across participants increased from $116 million in 2019 to more than $192 million in 2023. According to Stein, most participants are now experiencing DAF giving as a core share of total revenue. In 2023, the median study participant saw 12% of overall giving coming from DAFs. In fact, 12 of the 20 participants saw 10% or more of total revenue coming from DAFs that year, and six of the 20 benefited from 20% or more of revenue from DAFs.

To see the complete 57-page study go to https://www.givechariot.com/daf-fundraising-report

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Source From Non Profit Times