Nonprofits and Donor-Advised Funds: Perceptions and Potential Impacts

MICHAEL VOSS: Nonprofits and Donor-advised Funds: Perceptions, Progress, and Potential Impact. I'm Michael Voss, publisher of Stanford Social Innovation Review, and the host and moderator of today's webinar.

The Indiana University Lilly Family School of Philanthropy and Schwab Charitable recently collaborated to field a research study focused on the interaction between nonprofits and donor-advised funds, or DAFs. The resulting report, Nonprofits and Donor-advised Funds: Perceptions and Potential Impacts, examines DAFs from the perspective of nonprofit organization [...unintelligible...] of nonprofits experiences over the past three years, and an in-depth nonprofit case study review. The report also features a spotlight on nonprofits' experience during the COVID-19 crisis and how DAF donors responded during these times. Amir Pasic, the Eugene R. Tempel Dean of the Lilly Family School of Philanthropy says, and I quote, 'This new study expands understanding of a rapidly growing form of charitable giving and provides valuable suggestions for both nonprofits and DAF-sponsoring organizations based on the latest research.' What did this research uncover? Today's speakers will unpack the findings from this study and further share their perspectives on successful partnerships between nonprofits and DAFs.

Joining us today is Una Osili, a noted Ph.D. and the associate Dean for research and international programs at Indiana University's Lilly Family School of Philanthropy. An internationally recognized expert on economic development and philanthropy, Professor Osili speaks across the globe on issues related to research and policy in the fields of philanthropy, household behavior, and economic policy. Joining us as well is Fred Kaynor, the Vice President of Business Development and Marketing at Schwab Charitable. Fred brings over 20 years of financial services experience. He was formerly with MasterCard Worldwide, where he held senior level positions in customer marketing, global sponsorships, and account management.

Before I hand it off to our speakers, I want to mention that this webinar is part of the Giving with Impact series produced by SSIR and supported by Schwab Charitable, who helped with the selection of speakers and topics in the series. The series is designed to stimulate a discussion among the philanthropic sector around ways to maximize philanthropic impact. Through webinars like today's and a series of original podcasts, we hope to create a collaborative space for leading voices from the philanthropic ecosystem to engage in both aspirational and practical conversations on ways to achieve more effective philanthropy. You can find out more about the series by visiting SSIR.org/GivingWithImpact. Next slide, please.

With this, let me turn things over to Una and Fred to take us through their findings, and hand it over to Fred.

FRED KAYNOR: Next slide, please. Thank you, Michael, and thank you, Una, for this really exciting opportunity to share the finding of such an important and relevant research study that will help all of us to achieve maximum impact with our philanthropic plan, and, ultimately, support nonprofits in the most effective way possible.

So Schwab Charitable is committed to, and by its very mission and by its design, committed to helping to increase charitable giving in the United States. The results of our 2020 Donor Survey suggest that 65% of Schwab Charitable clients said that they've increased their philanthropic giving as a direct result of access to such an efficient platform for their charitable giving strategy. We've done a lot of research and there's been a lot of research fielded in the industry and sector around nonprofits and donor-advised funds, but largely those efforts have been focused on donor perceptions. And this is really, we believe, the first research study of its kind that really focuses on the perceptions by nonprofits of donor-advised funds, and is an in-depth effort to try to determine how and where donor-advised funds can truly be additive to nonprofits in terms of their efforts around development and fundraising. So the opportunity here is to engage more deeply with nonprofits in a manner that will truly be of maximum impact to them as they face an unprecedented time of challenges associated with their fundraising and their development efforts.

So, with that, if I may, turn it over to Una, please.

UNA OSILI: Thank you, Fred, and thank you, Michael, and thank you to all of you who have joined us today. We know that these are unprecedented times for nonprofits, and for the sector and our world as a whole. Before we begin, I'd like to start by acknowledging all the researchers and partners that participated and contributed to this project. Specifically, my colleagues from the Lilly Family School, Sasha Zarins and Jon Bergdoll, who played lead roles on this project.

Before we begin also, I think I'd like to just share a few words about the Lilly Family School. Many of you in the audience today already are familiar with the school. It is the world's first school dedicated solely to the study and teaching of philanthropy, and I feel honored to have been part of the school's growth over the last few decades. Indiana University has been at the vanguard of philanthropy education, establishing the first degree programs in philanthropic studies, the nation's first Bachelor's degree, Master's and Ph.D. degrees in the field. Today, the school plays a leading role in moving philanthropy forward across the country and around the world. Especially in this moment of crisis around the world, the school has been at the forefront of collecting data and sharing knowledge. And it's with that background that we are pleased to collaborate with Schwab Charitable on this project. Next slide, please.

To get started, I'd like to just share with you why we conducted this study and what we hoped to find. To provide a bit of context, grants from donor-advised funds reached an all-time record in 2018 of $23.42 billion, the highest level ever recorded. And between 2014 and 2018, grants made from DAFs increased 90%, over four times as quickly as growth in giving by individuals and total giving during the same timeframe. In fact, when we look back at the last few years, donor-advised funds have been not just increasing, but have gained attention from donors, nonprofits, scholars, the media and policymakers. Our team has actually calibrated questions that we've received over time, and donor-advised funds typically rank in the top three in terms of just volume of questions that we receive on an ongoing basis. In addition to the ongoing set of questions emerging in the field, there is also a gap that we have uncovered. Although many are very curious and very interested in learning more about donor-advised funds, there has not been as much research on their growth, and especially research that focuses on the nonprofit sector and is centered on the experiences of nonprofits during this period of record growth. So to bridge this gap, our research team conducted a two phase research study. Our goal was to better understand how nonprofit organizations interact with and perceive donor-advised funds. And to summarize our research focused on three big questions. The first one, how do nonprofit organizations perceive DAFs? The second, what is the process? How do nonprofit organizations actually receive donations and what challenges do they encounter along the way? And, finally, understanding that this requires both donor-advised funds sponsoring organizations and nonprofits to work together, what are some areas where both sides of this donation process can work more effectively to improve the DAF process, and, ultimately, to achieve more impact and effectiveness in the sector? So, that is a big picture overview.

Now, with that, I'd like to turn to the next slide and here, I'm going to take you behind the scenes to learn a little bit more about the design of the study, the data underlying the study, and the methodology that we used. Keep in mind, our team has had to really expand our work during the pandemic and especially in light of all the changes that the sector has experienced. And so when we started this project, we really did want to design it to be a national sample of nonprofits, and we're very pleased to say that the sample that we're sharing with you does embody and reflect the nonprofit sector.

We also recognize that it's important to understand the nonprofit perspective of DAFs. Perceptions not only affect how and when donor-advised funds are used, but they also affect policy-makers' decisions about the rules and regulations, and, ultimately, the long-term efficacy of DAFs as a philanthropic vehicle. So we also wanted to make sure, in addition to representing different types of organizations by revenue and asset size, you can see that the bulk of our sample is actually made up of small organizations that are under $1 million in revenue, and that's typically what we see in the nonprofit sector as a whole. When we look by sub-sector, our sample largely mirrors the nonprofit sector, with a representation among arts organizations, education nonprofits, environmental groups, human services organizations, and even spanning into some areas such as international.

And our goal was to provide as comprehensive a view of the nonprofit sector, and to our knowledge, this is one of the first studies that provides an in-depth view of donor-advised funds on the landscape with a centering on nonprofit organizations. It's also important to realize that we conducted a quantitative survey, but also interviews with nonprofits. The survey was conducted over a two-month period in early 2020, included a range of questions that touched on nonprofit perceptions, experiences, and the processes used to accept donor-advised fund gifts.

Now, on the next slide, here, I think it's worth noting that in addition to collecting the data, which is critical, we also went further and conducted interviews with six nonprofit organizations around the country who had received gifts from donor-advised funds in the past three years. These interviews were used to gain a more in-depth and nuanced understanding of how nonprofits interact with donor-advised funds. The value of this qualitative approach is actually worth emphasizing because these questions allowed us to go deeper into the why and the how nonprofits engage in the donor-advised fund process, and the potential to actually uncover the areas that are challenging or need improvement as we move forward were critical as we designed and conducted the interviews. So I do feel that in doing so, this study actually was comprehensive, but also moved us forward in our understanding of donor-advised funds and nonprofits.

On the next slide, I'd like to highlight some of the key themes of this project. Taking a step back, for those you who want to go deeper, the full report provides, first, an overview of the field of donor-advised funds. It also provides an overview of the policy issues and policy questions, and summarizes some of the research on the donor lens, as well. What we do in this project, though, is unpack nonprofit experiences with donor-advised funds and put this in a larger context. The full report is available on our school's website, and we don't have time, unfortunately, to cover all of the details that are included in the report. What I'd like to do in this webinar is touch on some of the key themes and foreshadow some of the findings. So to organize the findings, there are three key concepts.

The first is around perceptions. Perceptions are important because, as we know, donor-advised funds are relatively a new vehicle in the field of philanthropy, at least compared with some of the other ways of giving. What we found, importantly, is that experience with donor-advised funds tends to decrease concerns for many recipient organizations. So experience matters. The second key finding onto the theme of perceptions is that the donor relationship is very important, understandably, for many nonprofit organizations, and the concerns that we see reflected in the data and in the interviews reflects concerns about disruptions and the relationship between donors and nonprofits. It's also important to note that many nonprofits that we surveyed, a majority, are encouraged by the opportunities provided by DAFs to connect with high-net worth donors. So that's the first key theme.

The second key theme is a more, you could say practical theme, which focuses on the processes that nonprofits use to accept, manage, and track and solicit gifts, and to also acknowledge those gifts. The vast majority of surveyed nonprofits tend to receive gifts from DAFs, solicit gifts from DAFs and are prepared to receive the gifts. However, many recipient organizations are very interested in how they can communicate with their DAF donors more effectively. They also highlighted issues around acknowledging, and recognizing, and thanking their donors. And we did identify areas of confusion, specifically how to solicit gifts and manage the administrative burden associated with DAFs.

The final theme is one that we spent quite a bit of time on, and that was asking nonprofits, themselves, for specific recommendations to allow their organizations to work more effectively with donors and with sponsoring organizations.

FRED: Next slide please. And so what we found... thank you, Una. Thank you very much for sort of laying the foundation of the research study and its structure.

What we found with Una and her team's help and insights in conducting these multiple interviews and coming up with key findings that are actionable, is that, really, there's a twofold opportunity here from a donor-advised funds perspective. We have an opportunity to build upon best practices that many nonprofits already employ to leverage donor-advised funds as effectively as possible in a manner that's additive to their development and fundraising efforts, and we have an opportunity to increase awareness among nonprofits that may have a comparatively lower awareness of donor-advised funds, and how they can be additive to fundraising and development efforts. And we are going to use the findings of the study to address both opportunities in a manner that is going to be comprehensively supportive of nonprofits so that we can make sure that our solution is as efficient from the nonprofit perspective as it is from the donors. So next slide, please.

Una, if I may turn it back to you to share some of the key findings here. This is a great statistic.

UNA: Thank you, Fred, and thanks, also, for your partnership throughout this process.

One question that our team really set out to answer is how prevalent is the receipt of donor-advised funds among nonprofit organizations? And so with that, the finding that I'd like to start with is this data point that I think really did get my attention and the attention of our team. Within our survey, a majority of organizations, 70% of nonprofits surveyed, had received at least one gift from a donor-advised fund over the past three years. Why is this important to note? Keep in mind that although donor-advised funds are relatively new, they have been part of the nonprofit landscape for quite some time, but in the beginning, in the 1930s, they were mostly held at community foundations. And over time, we've had a growth in donor-advised funds sponsoring organizations and a growth in accounts. To give you a sense of the numbers here, based on the National Philanthropic Trust's annual report, the most recent data suggests that there are more than 593,000 donor-advised fund accounts, with over $72.4 billion in charitable assets. So being able to have that counter statistic on the nonprofit side to see that a majority of organizations are, in fact, receiving donor-advised funds is worth noting.

It's also important, and I think the takeaway is that the receipt of donor-advised funds does vary by revenue size. In particular, about 45% of smaller nonprofits with revenues below $100,000 had received a DAF in the past three years. In contrast, 100% of larger organizations had received DAF gifts. So this is certainly a place where we see differences by size, but overall, the finding here is that DAFs have become much more widespread in the nonprofit sector, and this is a statistic that I think we can continue to monitor going forward. The data here really do aluminate some of the questions that we have been asking, and I think many others in the sector.

Turning to the next slide, in addition to the prevalence question, another aspect of the research is to actually go a bit deeper to understand what challenges and opportunities nonprofits themselves perceive with regards to donor-advised funds.

So let's start with the moments that we're in, where there is increasing interest in many nonprofit organizations in thinking about sustainability over this period where there's a great deal of economic and other types of uncertainty. So, here, what we did find is that many nonprofit organizations were encouraged by the ability to reach wealthy donors, high-net worth donors, to cultivate and achieve larger gift sizes, and, ultimately, to receive unsolicited gifts. And we asked organizations to rate how effective or concerning certain aspects of donor-advised funds were. In general, gift size emerged as one of the key encouraging factors related to donor-advised funds. Forty-five percent, nearly half of our sample, expressed a positive benefit of donor-advised funds associated with gift size. And many of the positive perceptions were driven by organizations that had actually received gifts from donor-advised funds compared to organizations that had not received donor-advised fund gifts.

So, with that, I'd like to turn it over to Fred to see if these findings resonate with his own experience, especially in this period where, as we noted, there is quite a bit of uncertainty facing nonprofits and the economy as a whole.

FRED: Thanks Una. And the findings do, indeed, resonate very much with us at Schwab Charitable, and I think, more broadly, among DAFs. We really see that there's an opportunity here for us to engage with nonprofits in a manner that helps them understand exactly how to leverage our solution in a way that achieves some of the key opportunities that were articulated by Una earlier.

What we found is over the first half of this calendar year, over 60% of contributions made by our donors to their donor-advised fund account were in the form of appreciated non-cash assets. We also hear a consistent theme that, as I said before earlier, people are able to and inclined to give more as a result of the efficiency that's offered them with and through a donor-advised fund platform. So let me explain a little bit here.

Our platform is, as I said, highly efficient in its ability to help facilitate the process of donors receiving a variety… or contributing a variety of different kinds of assets, including cash, but, you know, more importantly, non-cash assets, like publicly-traded stock, restricted stock, private business interests, commercial and residential real estate, fine art and collectibles, and so forth. So what we do is in that process and in that efficiency, we accept those contributions, we liquidate them on behalf of the donors, they receive a fair market value tax deduction, and potentially avoid the capital gains that they would incur if they were to liquidate them themselves and then donate the proceeds, and in so doing, that means that much more that's, ultimately, available for them to give to the charities and causes they wish to support. And then, of course, we have a very efficient granting process, whereby it's a matter of clicking a couple of buttons, identifying the charity they wish to support, how they wish to be recognized, and then it's processed.

To Una's earlier point, I also want to emphasize that the beauty of our solution is also in the fact that we are... when they have made a contribution to a donor-advised fund, it is already an irrevocable gift to a charity, meaning it's already there and it's, by design, meant… that all of the assets in the account are meant to be used for charitable purposes only. So what that does is in the spirit of that efficiency of the solution, it empowers donors to be able to give not only on a sustained basis to support the charities and causes that are most important to them, but it also allows them access to resources for them to support episodic, tragic developments and disasters, such as what we faced with the pandemic, and a variety of natural disasters that are occurring right now, for example, with Delta.

So it is… the efficiency is not only in the ability to contribute a variety of different kinds of assets, but in that it is a resource that donors can turn to for both episodic and sustainable support of nonprofits and causes that are most meaningful to them.

So if I may, Una, with that, turn it back over to you, and we can go to the next slide.

UNA: Thank you, Fred. And in addition to uncovering some of the potential opportunities associated with donor-advised funds, we also uncovered some of the challenges or constraints that nonprofits face. At the core of the survey findings, we noticed the importance of the donor-nonprofit relationship. The survey respondents and interviewees, as you will note on this slide, noted some concerns about their ability to engage with donors. In fact, lack of contact with donors was perceived to be the biggest issue with DAF gifts among survey recipients. To give you the data point here, 60% of respondents indicated some level of concern with their ability to engage donors, or broadly, donor contact. As we dug deeper into the open-ended responses in the survey, nonprofits noted that they could only communicate with donors through the sponsoring organization. And this appeared to create missed opportunities to share proposals or engage donors in their projects.

Other respondents shared that it was generally difficult to get in contact with donors who give, and they often also shared in open-ended responses that they would like to be able to communicate with donors and around these issues. So at the top of the list was the ability to thank donors and acknowledge their gifts, communicate with donors about impact, donors care about this, and to track donors and solicit future gifts.

So this is a place where we did see some challenges. And I wanted to ask Fred to just chime in and perhaps touch on this topic of the ability to engage donors and anonymity as one of the challenges that some organizations are facing.

FRED: Sure thing, Una, and thank you, again, for this. And this is really an important theme to understand and figure out really how to address. I believe that the findings reflect the feeling of nonprofits who have comparatively limited experience with donor-advised funds, or haven't necessarily seen a significant spike in grants that are coming from donors through donor-advised funds. I would suggest that this is really important to understand and uncover so that we can make sure that we are as collaborative and transparent as possible in communicating exactly how donors can engage with their donor... excuse me, how nonprofits can engage with their donors through their donor-advised fund platform.

As it relates to your question on anonymity, we find, Una, that a very, very small portion of grants that are coming from our donor-advised fund platform are completely anonymous. In fact, it's… I believe three and a quarter percent was the latest statistics of all the grants that are made through a donor-advised fund… through our donor-advised fund, were done in an anonymous manner. I would also suggest that over 79% of grants that were received by nonprofits through a donor-advised fund contained contact information that enabled them to be in communication with those donors. So the vast majority of grants that are processed through a donor-advised fund contain information at the direction and guidance of the donor that allows these nonprofits to engage in a thoughtful communication and steward that relationship going forward. And if I could ask that you flip to the next slide, please.

This is just, again, more information. Three-quarters of nonprofits that received donor-advised fund gifts had been in contact with those donors. So the suggestion here is that while we acknowledge the findings of the research and are absolutely committed to doing whatever we can to elevate that awareness, the statistics suggest that the vast majority of nonprofits that received gifts from and through donor-advised funds receive… are in contact with the donors that made those grants. And we just... the obvious opportunity here is how do we increase awareness of that statistic and address the concerns that some nonprofits feel that donor-advised funds disintermediate them from the direct relationships with those donors? And if I may flip it again to Una, please, to the next slide.

UNA: Thank you, Fred. And I'm so glad that you touched on this notion of what are the gaps? I think within this research project, I'm also really encouraged to say that there is a call to action embedded in the research, and that is around information and lack of knowledge. We identified in the survey that many nonprofit organizations lack an understanding of donor-advised funds. And this is particularly true of smaller organizations, those with revenue sizes below 100,000. Many of those organizations shared a number of questions that they had about DAFs, even in their open-ended questions and their written responses. It does appear from the data that having experience with DAFs eases concerns for nonprofits. Organizations that had received at least one gift from a DAF in the past three years we're less concerned about issues related to DAFs. This is important because perceptions, as we've noted, affect how and when donor-advised funds are used, and impact policymakers' decision rules and regulations. Smaller organizations, especially those who have received no gifts or a few gifts from donor-advised funds indicated a lack of knowledge around the entire process of soliciting and receiving donor-advised fund gifts.

We did actually note that a small but noticeable portion of the survey did not actually know, had not heard of donor-advised funds, and didn't know how to reach donor-advised fund donors. So this specific information and communication gap is worth noting.

In terms of the data, 87% of the organizations that we surveyed had solicited DAF gifts, and actually received a DAF gift in the past three years. Forty-two percent of organizations that did not solicit gifts received a DAF gift. So this also speaks to the prevalence of DAF gifts in the nonprofit sector, and that many nonprofits are just beginning to adapt their fundraising methods and techniques. In particular, nonprofits that had explicitly solicited gifts by talking to donors, communicating with donors, in some cases, communicating directly with DAF sponsoring organizations, and including information about giving through a DAF in their fundraising communication, were able to achieve higher rates of success in receiving donor-advised fund gifts. In contrast, organizations that didn't solicit DAF gifts, and specifically didn't have information on… within their own organization, also noted that they may need to be better prepared to accept and process gifts in the future. We did ask organizations, specifically, how concerned or encouraged they were about the solicitation process, and, in general, what we did notice that many organizations noted that they did have difficulty in soliciting organizations, and over half of the respondents indicated they were concerned about how to actually solicit DAF gifts.

Now, just for… because I know that many in the audience are interested in this very question, solicitation of gifts, we do have some examples of how organizations are meeting with, or communicating directly with DAF donors. And I'll just cite that the top ways of soliciting gifts are meeting and communicating directly with donors who have DAFs, and communicating with sponsoring organizations, 25.7% of respondents.

I'm going to turn it over to Fred to actually share his own take on this gap in information, and, ultimately, the solicitation process. What can nonprofits do to bridge this gap?

FRED: Thanks, Una. If you could flip, please… I think, Una, you covered this already, so we'll just flip right to the next slide, please.

So to Una's point, exactly, there are exciting opportunities for us to engage with non-profits in a manner that is truly additive to your development and fundraising efforts. We view it as our responsibility in the spirit of our mission to help to increase charitable giving on an ongoing basis in the United States to do so.

So a couple of them just to touch on them briefly is number one, cultivate and steward the relationships. Identify donors with donor-advised funds, and then track and review their grant history to inform your outreach, and your communication, the appropriate timing, and the types of requests for support and so forth.

The next is personalize the ask. Reach out to donors at any time during the year, and particularly when the need is greatest. The dollars in donor-advised funds, again, as I mentioned before, are already earmarked for charitable giving, so decisions about when to give are not necessarily affected by changes in disposable income, or any potential adverse economic conditions.

Third, make it easy for donors to support you. We would encourage you to do whatever you can to ensure that they are aware that you accept gifts from donor-advised funds and there's an ability to do so, in fact, you encourage them to do so. There's a device and a widget that you can load onto your fundraising website, and it's called the DAF Direct Widget. It is effectively an application whereby you can… a donor can click on that application, be routed directly to their donor-advised fund, and, ultimately, process a gift from your website. So that is just one way in which, from a technology perspective, you could increase the ability for donors to make their gifts to you through their donor-advised fund accounts.

Help to provide an understanding of IRS code restrictions placed on gifts from donor-advised funds related to, for example, supporting events, memberships, fulfillment of legally binding pledges, and so forth. What is or isn't permissible with and through a donor-advised fund?

And then, lastly, engage around giving strategies, collaboration, and education. Educating donors on the appropriate timing and tax strategies to consider when they make their gifts are an even greater way to elevate awareness, and, ultimately, boost engagement around donors that leveraged donor-advised funds for their charitable giving. Talk about different topics that are relevant to donors with these types of endowment-giving vehicles such as giving non-cash assets, appreciated assets, such as stock, publicly-traded stock, restricted stock, and so forth. As I mentioned, additional tax strategies, bunching strategies, to be able to receive a tax deduction in a given year, if you itemize. Flexibility of giving through a donor-advised fund. That increased flexibility in terms of timing, giving on a sustained basis to ensure the health and wellbeing ongoing of your nonprofit. And episodic giving to support efforts to help people that are victims of, or impacted by natural disasters, pandemics, a variety of different kinds of things. That flexibility is something that is one of the key benefits for donors to leveraging giving vehicles such as donor-advised funds, and it's certainly worth discussing, and promoting to them in the context of your communication with them.

The next slide, please. This is an example that I wanted to share that we found was so compelling by one of the nonprofit organizations that really embraces messaging around donor-advised funds. St. Jude's is, obviously, a recognized national organization for the tremendous work that it does for pediatric cancer research and treatment. And they came out with a very successful campaign not long ago that promoted to both existing and prospective donors that they accept gifts through donor-advised funds. And they actually encourage people to consider giving gifts through donor-advised funds in a manner that would be additive to their fundraising and development, and, ultimately, demonstrate more accessibility and engagement with donors that potentially have larger potential gifts to make or can be… are prospects, but haven't otherwise given, and didn't realize that they could do so through a donor-advised fund. So this was a very deliberate effort to try and elevate awareness of the fact that they accepted, gladly, gifts through donor-advised funds. And it's my understanding that this effort was extremely successful for St Jude's.

So with that, Una, if I may, turn it over… if you could flip to the next slide, please… if I may turn it over back to you.

UNA: Thank you, Fred. And one of the important components of this research is the time in which it was being conducted. So it's critical that we emphasize what the lessons learned and the key findings are because, as we all know, 2020 is an unprecedented year, and many nonprofits are facing funding gaps. So, with that, we actually have some recommendations from the nonprofits that we surveyed, and interviews for a sponsoring organization. And a lot of these recommendations focus on bridging the communication and information gap. Specifically, many of the survey respondents and interviewees asked that sponsoring organizations increase communication with nonprofits and provide educational opportunities, such as webinars for nonprofit organizations and proactively communicate with organizations with little or no experience with DAFs. One example that was offered by a national human service organization is around education, educating non-profits so that they better understand what donors want, and they can actively solicit them through the DAF sponsoring organization.

On the next slide, we also have specific tips that apply to donors, and to others in the sector. And I'll just go through some of these tips, but also keep in mind that the report has a range of additional ideas. So for the nonprofit organizations, we learned that many of them have achieved success by talking to donors about DAFs, including information about giving from adapt in communication with donors. That could include information on the website, mailings, email newsletters, and in these virtual worlds that we now live in, through virtual means. It's also important to make sure that staff across the organization are familiar with the benefits and limitations of gifts from DAFs. For example, DAFs may not be used to purchase memberships, or buy tickets to galas, in some cases, or pay for future events. The IRS has some clarification around some of these pledges, so it's very important that staff within non-profits know these regulations, and can articulate them to donors.

It's also important as we go through a lot of the recommendations that the recognition and credit is provided. Many organizations have a solid process in place to accept and code gifts from DAFS and if they are organizations that haven't developed this, this may be a good opportunity to learn how best to do this. And that may include thanking the original donor having a template for thank you letters for donors that are giving through their DAFs, whether they are giving anonymously or not. And also expand attempts to solicit gifts from DAFs. One very prominent example that I think Fred already mentioned is adding a widget to your website that allows your organization to accept gifts from DAFs, and include that option for giving through DAFs, in both print and online communication.

Let's go to the next slide, please. As we summarize the findings from this research, I think we need to take a step back and look at the big picture. We are very aware of the times that we live in, and that many organizations are looking to identify opportunities to engage with donors, and also to expand their fundraising potential. What we learned from this study, and the full report has a lot more detail than we've been able to share in this webinar, is that perceptions of DAFs were primarily neutral, but there was both a positive perception of donor-advised funds, especially in this period as a way of bringing in high net worth donors and larger gift sizes. So that is something that I think is very encouraging, especially in the times we live in. We note that a majority of organizations have actually received a DAF gift and have a process in place to manage DAF gifts, but many are concerned about how to steward relationships with donors, how to continue to develop relationships and solicit future gifts from organizations. A key data point is that I already noted that 55% are concerned about solicitations, but that number goes up even higher to 70% for organizations that haven't received donor-advised fund gifts.

In general, though, a key takeaway is that more experience with DAFs was associated with a more positive perception. We also identified that there is an information communication gap, and that both sponsoring organizations and nonprofits have an opportunity in this moment to educate each other, in order to improve the overall experience, and, ultimately, achieve greater impact. We also wanted to note that at the heart of the nonprofit sector is the work of many organizations, but also their relationships with donors. Nonprofits want to be able to thank and cultivate their donors and have found this to be somewhat of a challenge, as they navigate the DAF world. What we have uncovered in this study is that there's an opportunity, also, for sponsoring organizations to develop a DAF process that allows nonprofits to build deeper relationships with sponsoring organizations and with donors.

With that, I think we also have a lot of encouragement in these results. Taken together, we've learned that in this time period, there has been an increased interest in donor-advised funds from donors and nonprofit organizations, many organizations, both through the surveys and the interviews, are having a positive impact on their fundraising revenue through DAFs. And there's also a real, I think, moment here where we can start to bridge the information and communication gaps that we identified, in order to achieve larger impact. So, with that, I'll turn it back over to Fred.

FRED: Thanks, Una. And thank you for that great summary. Again, when we approached Una, and the Lilly School on this opportunity, it was really with the focus and desire to ensure that we conducted an in-depth study to understand exactly where the opportunities were, where concerns lie, and, ultimately, find a way to address them in a manner that would be truly additive to nonprofits as they face some of the most difficult and uncertain times ever.

If you could flip to the next slide, please. To Una's point, we already offer a host of different resources that are designed to provide nonprofits with the tools, and the content, and the information that will help them increase awareness among their existing donor base and potentially among prospects to ensure that they know that you accept gifts through donor-advised funds. We provide helpful best practices and guidelines, be it related to granting guidelines or tips on engaging more deeply with donors, articulating sort of the benefits to nonprofits of donor-advised funds, and messaging on how you can communicate those benefits to your donors and so forth. Also, Una reiterated the information on the widget, making it easier for people to give with and through a donor-advised fund.

So we are absolutely committed to doing whatever we can to ensure that we are a resource as much to nonprofits that are supported through donors with their donor-advised buzz as we are to the donors, themselves. So thank you very much, Una.

And, with that, if I may turn it over to Michael.

MICHAEL: Well, Fred, Una, thank you for your presentation. It went a little longer than we had originally planned, but I think it was a lot of important information to share out.

But now is the point when we're going to spend the next 10 minutes or so addressing some of the questions that have come in from the audience. I know we received quite a few even before the webinar and the registration process, and quite a few came in during the course of the webinar. We won't have time to field everyone's question, but we'll try to get to as many as we can.

So with that, let's jump in. And, Una, a question that I'd like to direct to you to start us off is, 'What should future… what should future research examine related to donor-advised funds and the relationship with nonprofit organizations?' So I guess, what were you unable to get at with this current research and either based on the findings or based on discussions that you've been having since you started this work, what are some of the other areas that you think need to be probed-out a little bit more?

UNA: Thank you, Michael, and I do think that there's a lot more to cover. This is just the first study. Given the time that we're in, it would be very important to also look at to what extent nonprofits are benefiting from donor-advised funds right now, and what areas, specifically, are benefiting? Is it healthcare, human services, the environment? Knowing more about that sub-sector impact, I think, is very important. And also with our nation's reckoning on race and social justice, being able to see the impact that donor-advised funds are having, specifically, on issues of racial justice and social justice.

MICHAEL: That's an excellent point, especially with all of the questions about racial justice that we've been wrestling with for decades, but even more acutely in recent months.

Fred, in response to COVID-19, have DAFs increased grant contributions because of the pandemic and the need to support organizations, not only with relief, but, you know, they're just suffering as a result of the economic downturn?

FRED: Thanks, Michael. The answer is a resounding yes. We have seen an extraordinary outpouring of generosity among donors for… specifically for activities related to the COVID-19 pandemic. That includes, you know, recovery and relief efforts, it includes viral treatment research, and it, ultimately, also, includes vaccine acceleration efforts. What we saw in the first six months was really nothing short of historic in terms of the engagement among our donors to support not only specifically earmarked activities around COVID, but also in their efforts to ensure that their nonprofit organizations and causes of choice have sustained support in the face of this uncertainty to ensure that they are operating with maximum efficiency, as well.

So some statistics are we saw over $1.7 billion in grants and 330,000 grants in the first half of the calendar year, which is almost a 50% increase during the same period, relative to the same period year ago. That is, if you consider already the pretty amazing generosity of our donors, consider then the generosity and the increase in that generosity in the face of such extraordinary times, and that it's a demonstration of their commitment to supporting really people in need in such an important and meaningful way.

So, yes, in answer to your question, we've seen a significant spike in support during this period.

MICHAEL: Una, let me turn back to you, and apologies for sort of jumping around here, but I'm trying to cover a range of questions. 'Many of the issues related…' someone asks, 'Many of the issues related to DAFs touched on in the survey were rated as neutral by a majority of the organizations who responded. What do you think this indicates on both a scholarly level and on a practical level?'

UNA: Thank you, Michael, for that question. I think it speaks to the fact that many organizations lack experience with DAFs, so that may also be part of it. I think there's also the perception as we've noted that there are some concerns that they have. And so for many organizations, I think that neutral, from a practical perspective means they would like to see some more information, they have some concerns, but they're also very conscious of this as an area of opportunity. So when you put all that together, that's neutral.

From a scholarly perspective, I think that is why we conducted the interviews, because we were aware of the complexity of the issues surrounding DAFs, both the benefits and the constraints that organizations were facing. And I think importantly, the regulatory questions that we didn't have time to address here in this webinar, but are also part of the wrestling that many nonprofits are akin to. And I think in this environment, many nonprofits are very interested in how they can increase their ability to raise funds, but also wanting to ensure that they comply with any of the regulatory requirements.

MICHAEL: Thank you for that. Fred, how can DAFs help donors be more strategic in making their giving decisions? And sort of related to that, you mentioned the tools of the widget that St. Jude used, are there any other specific tools that make it easier for nonprofits to be able to engage with DAF sponsors and how do people get those?

FRED: Sure. So I'll give you the first question as relates to how we help donors to be more strategic in their giving. So the solution, in and of itself, by its design, is meant to make giving as efficient and tax-smart as possible for these donors, so that they can give as much as possible and potentially give more than they otherwise would by virtue of that efficiency. In addition to the efficiency of the platform, itself, to your point, we offer a variety of different tools that are donor-facing or that touch really all elements of the charitable giving ecosystem to be as informed and thoughtful in the way they give, how they give, and when they give, as possible. We have thought leadership content as it relates to consideration on tax strategies and how to give with maximum impact under the current tax law, and with the changes to the new CAREs Act, why this is a particularly good year to give from a tax perspective, from, you know, giving the type of assets that are going to result in their maximum impact and so forth.

And with respect to the second part of your question on the tools that we offer to the nonprofits, again, we offer a variety of things. If you look on our website at SchwabCharitable.org/Charities, that website and those resources are by design meant to provide the nonprofits that receive support from donors through their donor-advised fund with best practices, with tips on how to engage in a more thoughtful conversation with their donors, by leveraging donor-advised funds and promoting them as a vehicle through which they accept gifts.

So lots of… for the donor, it's the efficiency, and the efficacy, and the benefit to the structure of the solution, itself. And for nonprofits, it's really best practices on how to engage and create awareness and make sure that their donors know that they accept gifts through donor-advised funds.

MICHAEL: And Fred, I guess a follow-up question for this is… there were a lot of specific questions coming from the audience. So one was… and I thought this was interesting. 'Who makes donation decisions for the DAF once the first generation of donors are no longer around to direct their gifts?'

FRED: That's a great question, and it really is… there's a variety of options for our donors to consider when they're considering what to do with their donor-advised funds beyond their lifetime. We have something… at the time that they open their account, they can identify additional account holders. They can identify successors on their account. They can identify beneficiaries, that is, charitable organizations to which they choose to direct their donor-advised fund gifts when they are no longer able to process those transactions themselves. And then we have something called the Legacy Program. The Legacy Program by its design is meant to provide a platform to donors that would fulfill their charitable wishes and their charitable intent with their donor-advised fund upon their passing for a sustained period, based on a number of criteria and information that they would provide.

So there's no one answer, but, again, it's the beauty of the flexibility and the options that we provide to donors that make it something that would really efficiently and effectively address what they want to do with their account beyond their lifetime.

MICHAEL: There were a whole bunch of other questions that actually started diving into the research, which I wish we had time for, including questions about did you notice any differences between, let's say, national DAFs, like a Schwab Charitable, or community foundation DAFs, or what have you. Unfortunately, we're not going to have time to get to that right now, but I am going to direct everyone. We have put links in the Q&A to access the report from the Lilly School and the data. And, of course, we'll also be sharing all of the presentation decks and the recording of this after the fact, since, unfortunately we're out of questions.

If you want to dive deeper into this subject, I encourage you in the audience to consult the list of resources that our speakers have helped us compile. That slide, along with all the other slides, are available for download, so no need to write anything down. You can just download that.

Next slide, please. I hope you'll all agree that this has been a very interesting session. I want to, once again, thank Una and Fred for leading this discussion around the interaction between nonprofits and donor-advised funds. As I mentioned at our start, this webinar is part of the Giving With Impact series. To learn more about the series, please visit SSIR.org/GivingWithImpact, which is produced by SSIR with the support of Schwab Charitable.

A few quick reminders. You can access this webinar as many times as you want over the next 12 months. If you want a .pdf of the slide presentation, you can use the link… an email will be sent out to you shortly with a link that you can use to download that slide presentation and to access the recording. Also, in that email, there's a link to take a brief survey. Your feedback is valuable and it helps us to improve our webinars.

Out next webinar will be How to Interview Your Data and Elevate Your Nonprofit's Mission, and that's scheduled for Tuesday, October 27^th. In this program, a professor from Stanford University will discuss powerful data visualization and data-driven communications techniques. If you're interested in registering for that or learning more about our other programs, please visit SSIR.org/Webinar.

And with that, I'd just like to thank you all again for participating.

FRED: Thank you very much, Michael.

UNA: Thank you, Michael. Thank you, all.