Taking a White Glove Approach to Grants From Donor Advised Funds

Feb 2, 2023 Man smiling at the camera on left half of screen, Title

Has your organization received a check from a donor advised fund (DAF) and needed clarification on how to thank and cultivate this donor relationship? Consider these tips to effectively care for and steward current and future DAF grants.

Sending a Receipt

Grants from DAFs are not tax deductible, and you should not send the donor or the DAF Sponsor a gift acknowledgement with tax language. Instead, consider sending a simple acknowledgement that you received a gift from their donor advised fund and/or send a thank you note for the gift.

Thanking donors

Technically, the donor for a grant from a DAF is the DAF Sponsor. In our case, that’s the Community Foundation of Greater Des Moines. But that shouldn’t stop you from recognizing the person or family behind a grant. If you receive a grant from the John & Sally Smith Charitable Fund, you should thank John and Sally, not the Community Foundation. If you know John and Sally, send them a thank you note directly. If you don't know them, we might be able to share their contact information if they have given us permission to do so. Never hesitate to give us a call. And when in doubt, send a thank you note to us, and we will forward it along.

Recognition and Benefits

Does the gift you received from a DAF qualify the donor for certain recognitions or benefits?  If so, pause and consider the type of recognition. If a gift of a particular size provides the donor the opportunity to have their name printed on a donor wall, in an event program, or even to name a space in a building, the granting  DAF donor(s) would be eligible for such recognition. If the grant came from the John & Sally Smith Charitable Fund, you may recognize the donor as simply John and Sally Smith, pending their approval.

If, however, the gift from a DAF qualifies the donor for tangible benefits, such as seats at a gala or an entry in a golf tournament, the donor(s) would not be allowed to accept the tangible benefit in appreciation for their gift from their DAF. We recommend donors revoke the right to tangible benefits if giving from their DAF or make the gift from other sources if receiving the tangible benefit is important to them.

Prospecting Donors for DAF Grant

DAFs can only make distributions to charitable organizations and causes. As such, they may be a very valuable tool in your toolbox as you seek to cultivate existing and prospective donors. Consider adding a question to your donor stewardship process, such as “Do you have a donor advised fund, and if so, would you be interested in learning more about how you could support our organization through your DAF? And while a DAF cannot be held to a binding pledge, we recommend nonprofits include an option on pledge and commitment forms for donors to make a one-time or recurring grant from their DAF in lieu of a pledge to maximize charitable tools to meet giving goals.