DAF Grantmaking, by the Data: New Research on Crisis Response and Recurring Giving

Speakers

• Jon Bergdoll, Interim Director of Data and Research, Lilly Family School of Philanthropy

• James Payne-Gill, Senior Data Scientist, GivingTuesday Data Commons

• Danielle Vance-McMullen, Co-Founder, DAF Research Collaborative and Associate Professor of Public Policy and Nonprofit Management, DePaul University

Session Highlights

1. Emergent data suggest that DAF donors are responsive in times of crisis.  Data provides evidence that DAF grants increased disproportionately for human service organizations during the COVID-19 crisis and for nonprofits experiencing financial distress in 2022, suggesting DAFs can serve as a responsive source of philanthropic capital when needs spike.

2. Repeat giving is an important characteristic of DAF philanthropy. New research from the DAF Research Collaborative and GivingTuesday shows that repeat giving is typical among DAF donors, often extending beyond a second grant and continuing over many years, creating stable and valuable nonprofit relationships.

3. DAF sponsors can play a meaningful role in strengthening nonprofit-donor relationships. Session presenters encouraged sponsors (and advisors by extension) to help nonprofits better understand DAFs, improve stewardship practices, and create pathways that encourage repeat and recurring giving.

Two research presentations offered compelling evidence that donor advised funds are not only an important source of charitable capital, but also an important tool for both responsive and sustained philanthropy. Together, the findings challenged common assumptions about DAFs by providing data-based evidence on how they can help nonprofits navigate periods of financial distress while also supporting long-term donor relationships through repeat and recurring giving.

The first section, Do DAFs Respond to Nonprofit Financial Distress?, examined whether DAF grants increase when nonprofit organizations face heightened need.  Drawing on research from the Lilly Family School of Philanthropy and GivingUSA, the presentation framed the data through a supply-and-demand lens.  In times of crisis, human and organizational need increases, while economic uncertainty can constrain traditional charitable giving.  DAFs may help bridge that gap by insulating charitable dollars from immediate economic volatility.  Because funds have already been set aside for philanthropy, donors can deploy resources more quickly when emergencies arise.

To test this theory, researchers analyzed Schedule I data from Form 990 filings.  The dataset included 187 organizations responsible for roughly half of all DAF grantmaking activity.  Using a difference-in-difference methodology, the team compared giving patterns during the COVID-19 pandemic in 2020 and financial stress experienced by nonprofits in 2022.

The findings suggest that DAF donors do respond to crises.  Human service organizations experienced a 20.4% differential increase in DAF grant growth in 2020.  Researchers also found evidence that DAF giving increased to organizations experiencing financial distress.  Interestingly, one of the strongest indicators was organizational asset size, a relatively simple proxy that may be more visible and understandable to donors than complex financial ratios or reserve calculations. The results suggest that DAFs can function as a responsive philanthropic vehicle, enabling donors to direct resources toward organizations facing urgent challenges.

The second presentation, from the DAF Research Collaborative and GivingTuesday, shifted attention from reactive giving to long-term donor behavior by examining repeat and recurring giving through DAFs.  The presenters emphasized that repeat giving is one of the strongest indicators of a healthy donor-nonprofit relationship.  In the broader charitable sector, donor retention is a known challenge.  Recurring giving can be especially powerful because it transforms charitable contributions from a series of individual decisions into an ongoing commitment.

Survey data indicated that DAF donors count themselves as loyal supporters.  Sixty-one percent reported that more than three-quarters of their DAF grants went to the same organizations year after year.  Donors also reported a preference for making recurring gifts through their DAFs rather than giving directly.

The research team supplemented survey findings with transaction-level data spanning nine years and more than 50,000 DAF accounts across 111 sponsoring organizations.  The data showed that repeat giving is widespread and that many donor-nonprofit relationships extend far beyond a second grant.  Annual automated gifts were the most common form of recurring support, and donors who established recurring grants often supplemented those scheduled contributions with additional gifts.  These supplemental gifts tended to be larger than the recurring grants themselves, suggesting that recurring giving serves as an anchor for broader philanthropic engagement.

Researchers identified five distinct patterns of DAF donor behavior: 

1. “Missed opportunities” are around ~5% of all giving relationships; these donors are lapsed, and have smaller accounts. 

2. “Irregular relationships” comprise ~40% of all relationships; these are moderate DAF users, they may be reacting to external solicitations.

3. “Consistent supporters” are also ~40% of all relationships; these are consistent in gift size and timing, have larger accounts, and may also be multi-year commitments. 

4. “Above and beyond” donors are ~10% of giving relationships; more repeat and less consistency but larger intermittent gifts, comprise long-term relationships.

5. “Rapid deployment” donors make up about ~5% of givers; they are DAF superusers so it’s often multiple organizations, not automated, but inspired.

While giving behaviors varied across these groups, the findings reinforced that repeat giving is the norm rather than the exception for many DAF donors.

For DAF sponsors, the practical implications were clear.  Presenters encouraged sponsors to help nonprofits better understand how DAFs work, including how to interpret grant/payment conveyance letters and track DAF gifts within donor databases.  They also recommended making repeat and recurring grantmaking easier, informing nonprofits when automated grants are scheduled, encouraging electronic fund transfer payment methods, and proactively communicating with donors about recurring giving options.  Collectively, these strategies can strengthen donor relationships, increase long-term support for nonprofits, and maximize the philanthropic potential of donor-advised funds.

Actionable Takeaways for Advisors

• Clients can use DAFs as a "reactive philanthropic capital reserve" during times of nonprofit financial distress.

  During periods of economic uncertainty, nonprofits often face increased demand at exactly the moment when charitable giving can become less predictable.  This research suggests that DAF assets can be deployed quickly in response to crises, making them an effective tool for responsive philanthropy.

• Because DAF donors are primed for long term relationships, advisors can help clients become more intentional repeat givers.

  This research dispels the misconception that DAFs facilitate transactional or less frequent giving. Recurring and repeat giving generate higher lifetime value for nonprofits and are associated with stronger donor relationships.

For advisors, this creates a practical client conversation:

• Which organizations receive support every year?

• Are there organizations the client views as mission-critical?

• Would recurring annual grants provide more stability?

• Are there multi-year commitments the client would like to formalize?

Additional Reading

Give Me Some Slack: Donor Advised Fund Granting During Crises

Understanding Donor-Advised Funds: How Grants Flow During Recessions