The Tax Strategy Worked. Now What? Helping Advisors Move DAF Clients from Transaction to Impact.

Speaker

• Michael L. Thompson, CAP®, AEP®, Founder and Philanthropy Advisor, Aligned Giving, LLC

Session highlights

• Diagnose intent before evaluating DAF activity. A balance and giving history do not tell you what role the donor intends the fund to play.

• Do not stop at capacity. Financial planning can establish what a client can comfortably give, but capacity is not the same as a giving plan.

• Use structure without making giving rigid. Intentional giving can preserve room for unexpected needs and requests.

Michael L. Thompson led an interactive session on what happens after a donor-advised fund has been established and funded.

Thompson challenged financial advisors to recognize when the technical planning is complete but the giving plan is not, and to know when to ask better questions or bring in another resource. A successful DAF transaction can answer important planning questions: which asset to contribute, when, how much, and which vehicle to use. But one basic question can remain unresolved: What is this money for?

In an interactive case study, attendees met Susan and David, a fictional couple in their late sixties with a $1.65 million DAF created around the sale of David’s dental practice and approximately $45,000 in annual grants to 16 organizations during its first year. They already had a financial advisor, CPA, and estate attorney.

The obvious question: What should they do with the DAF?

Thompson asked the room to resist one of an advisor’s strongest instincts: the solution reflex. Participants were asked not to talk about deductions, investment performance, contribution strategies, DAF features, or nonprofit recommendations. The assignment was simply to understand Susan and David.

At my table, we started with basic questions: What stage of life are they in? What are they already supporting? How do they spend their time? What are they trying to accomplish? Shannon Stagner of Austin Community Foundation offered another deceptively simple question: What brings them joy?

That exercise made one of Thompson’s main points concrete: diagnose intent before evaluating activity. A DAF balance and a year of grants are data points, Thompson argued, not a diagnosis.

He used the DAF Research Collaborative’s “tub, tank, and tower” framework to illustrate different donor strategies. A tub moves money in and out relatively quickly. A tank is funded in larger amounts and granted down over the nearer term. A tower sustains giving over a longer horizon. None is inherently better. Before deciding whether a donor is “doing enough,” advisors need to understand what role the donor intends the DAF to play.

Next, participants learned that Susan and David could comfortably explore annual giving of $100,000 to $150,000. The financial analysis answered the capacity question. The purpose question was still open.

For me, the clearest takeaway was this: don’t stop at capacity. Financial planning may establish that a client can comfortably give $125,000 a year. The next question is: What do you want that $125,000 to accomplish?

Thompson gave the group a simple structure for that next conversation: Purpose, Priorities, Plan, Practice, and Perpetuation. The framework asks why a client gives, what they care about, how much and how intentionally they want to give, how those intentions show up in grants, and how they want the giving to continue after their lifetimes.

He was also careful not to turn “having a plan” into another form of rigidity. As he put it, the opposite of reactive giving is not rigid giving; it is intentional giving. A plan can still leave room for a friend’s fundraiser, a disaster, or a neighbor in trouble. Flexibility can be part of the plan.

Thompson emphasized that advisors do not have to do this work alone. The advisor’s role may be to open the conversation, establish financial capacity, and recognize when a DAF sponsor, philanthropic advisor, or other resource should join the team.

He closed by asking participants to identify one real client with a funded DAF and one question they would ask differently. Thompson suggested asking:

“What did you originally hope this fund would make possible?”

That is a good place to start. Financial planning may tell a client what they can afford to give. Figuring out what they want that giving to do requires a different conversation.