Far from being mysterious, DAF grants follow clear patterns associated with high-net-worth donors

Donor Advised Funds: data key to understanding this important giving mechanism

Posted on January 6, 2022 by Aja Pirtle

Far from being mysterious, DAF grants follow clear patterns associated with high-net-worth donors.

In the United States, the giving vehicles known as donor-advised funds (DAFs) have garnered an enormous amount of attention in recent years due to their rapid growth across every category, from asset value to number of accounts to contributions and grants. According to one recent report, grants from DAFs in 2020 would be equivalent to roughly seven per cent of total giving to nonprofits in that year in Giving USA.

Recent well-publicized efforts have sought to place stricter regulations on these giving vehicles. Some critics have accused DAFs of not distributing funds to nonprofits quickly enough, citing the rapid growth in DAF asset value and the fact that DAFs may make distributions to other DAFs, an operation known as DAF-to-DAF transfers. In many of these conversations, DAFs are characterized at best as mysterious and at worst as nefarious.

Regardless of one’s views, these conversations suffer from a lack of available data. Our new research, published in partnership with Giving USA Foundation, helps to demystify the role that DAFs play in the philanthropic sector by looking at how DAF grant dollars flow within the sector and which organizations serve as the final destination for these grants.

Our study, which tracks over 70 per cent of total DAF grant dollars from 2014-2018, found that grants from DAFs follow clear patterns and that these patterns stay relatively stable over time. Education and religion received the most dollars from DAFs over those years, at 29 per cent and 14 per cent of total DAF grant dollars respectively. Those percentages are almost exactly reversed when compared to giving from all sources during those years, with religion receiving 31 per cent of the total and education receiving 14 per cent. We also found that giving to arts received 9% of DAF grant dollars, compared with four per cent of the total in Giving USA. These giving patterns, perhaps unsurprisingly, closely reflect the philanthropic priorities reported by high net-worth donors in other research by the school.

These trends may be changing in the wake of the exceptional events of 2020. According to a subset of data from 2019 and 2020, DAF grant dollar amounts grew by 39 per cent and the number of distinct grantees grew 11% between 2019 and 2020. DAF giving to human services grew 138 per cent, while giving to public-society benefit organizations nearly doubled. DAF grants to Historically Black Colleges and Universities and other racial justice organizations more than quadrupled.

Finally, our study found that DAF-to-DAF transfers grew from six per cent to 12 per cent of all outflowing dollars from DAFs in our sample from 2014-2018. These transfers seem to be innocuous – they typically represent accounts transferring from one sponsor to another – but these transfers should be accounted for as policymakers and other researchers consider how to measure DAF activity. The growth in transfers from DAFs to other DAFs is a reminder that DAFs are one of the many different types of intermediary organizations through which philanthropic dollars flow within the sector.

Our study addresses some of the gaps in knowledge about DAFs, but there are many aspects of DAFs that need additional exploration, including the question of how DAF accounts are operating at the individual account level.

Contributions to and grants from DAFs continue to grow at impressive rates, meaning that DAFs are likely to play an even more prominent role in philanthropy in the future than they do now. No matter how one feels about them, DAFs are part of the philanthropic landscape, and it is more vital than ever to have a deep understanding of the role that these giving vehicles play in philanthropy.

This article was first published by Alliance magazine on 4 January and is being re-published with permission.

Anna Pruitt is Managing Editor of Giving USA, and Jon Bergdoll is a statistician, both at the Indiana University Lilly Family School of Philanthropy at IUPUI. They are co-authors of the recently released Giving USA Special Report Donor-Advised Funds: New Insights, which is published by Giving USA Foundation.

Inside the donor mind: Giving to women’s and girls’ causes

Posted on December 23, 2021 by Andy Ware

By Jeannie Infante Sager, director, Women’s Philanthropy Institute

Each year, when the Women’s Philanthropy Institute (WPI) releases its Women & Girls Index (WGI), we wait to see how far the needle has moved on giving to women’s and girls’ organizations.

In this year’s report, we saw some progress in terms of year-over-year growth. Yet support for women’s and girls’ organizations still remains a small subset of total philanthropy in the U.S.: 1.9 percent.

The newest findings unleash a sense of urgency for giving to women’s and girls’ causes. They are also a reminder that donors to women’s and girls’ causes must continue to grow in terms of number and scale. And as giving to this subsector continues to expand, we are learning more about the patterns that unite donors. Aided by WPI’s body of research and personal anecdotes, below is a roadmap that helps peel back the curtain on characteristics of and future directions for donors to women’s and girls’ causes.

Why choose women’s and girls’ causes?

Donors who support women’s and girls’ causes expressed motivations in terms of their personal experiences—driven in part by their own history with gender discrimination, pay inequality, and more. Many donors are also united by the belief that funding women’s and girls’ initiatives leads to societal progress. As famed donor Melinda French Gates shares: “When we invest in women and girls, we are investing in the people who invest in everyone else.”

High-net-worth women donors echo sentiments about personal experiences and a belief that funding women is a “nexus for many other issues, including poverty, climate change and wealth inequality.” These donors are also interested in taking risks to bet big on women and girls. They have a preference for going upstream—funding systemic change rather than direct service.

Beyond writing a check

There are numerous ways that donors are creatively supporting women and girls. Research on women’s fund and foundation donors reminds us that many donors want to do more than simply write a check. Participating in activities that enable more engagement is an important aspect of advancing women’s and girls’ causes.

From serving on a nonprofit board to volunteering to simply sitting down and talking with a friend about why this kind of giving matters, this group of donors has adopted a holistic, engaged approach to supporting women and girls.

The value in shedding “anonymous”

Choosing to give anonymously is a personal decision for donors to any cause. But social norms research underscores the potential impact that visibility may bring to this subsector. Messages about rising levels of giving to women’s and girls’ causes resonate with all donors—both men and women. In other words, when you talk about your investments in women and girls, you may inspire someone else to follow suit.

Today, there are more ways than ever for donors to be “visible” with their giving. Sharing on social media, speaking at a conference or dinner, and asking nonprofits how you can champion their causes all can help inspire others to contribute.

Moreover, the type of message a donor relays matters. Focusing on the rising popularity of women’s and girls’ causes (for example, “Philanthropic support for women’s and girls’ organizations surpassed $8 billion in 2018”) increases people’s intentions to donate to those causes, compared to focusing on current levels of giving (for example, “Philanthropic support for women’s and girls’ organizations represents a small share of overall charitable giving: 1.9 percent”). This tactic is equally effective for women and men donors.

At the end of the day: give

Raising the 1.9 percent of charitable giving that goes to women and girls can feel like a massive summit to scale. Changing that number will not happen overnight, but will only shift when we are inspired and motivated to create real change around gender equity.

My advice for donors? Follow what excites you, wrestle with the entrenched challenges of our time, and reflect on your own desires for the world you want to see. Donors to women’s and girls’ causes have laid the foundation for a highly engaged form of giving. Continue to lead by example.

Creating partnership: United Ways, community foundations, and community building

Posted on December 20, 2021 by Andy Ware

By Cherilyn Horning and Laurie E. Paarlberg

Partnerships between United Ways and community foundations are not a new phenomenon. United Ways and community foundations have long worked together to meet community needs in many communities across the U.S.

These partnerships were particularly vital during COVID-19 when local United Ways and community foundations often worked together to coordinate a variety of relief efforts, including joint fundraising, service coordination, and information and referral. Despite the importance of such cooperative efforts, United Ways and community foundations face increasing competition in their local community for donors, volunteers, and staff.

Understanding how local organizations balance cooperative behavior in competitive environments, what the management literature describes as coopetitive behavior, can help strengthen collaborative efforts in local communities.

For the past two years, a team of scholars and students from the Lilly Family School of Philanthropy, the O’Neill School of Public and Environmental Affairs (IUPUI), and Ohio State University have explored how United Ways and community foundations navigate “coopetitive” relationships in their local communities. The research sheds light on how these complex relationships are developed and sustained.

In late 2019, the research team surveyed United Ways and community foundations across the U.S. to understand how they perceive their relationships and their respective United Way/community foundation counterpart. In 2020, the team studied eight communities in which local United Ways and community foundations were actively engaged in partnerships to learn how these relationships are managed and what factors support cooperative action.

The study continued throughout 2020 and early 2021 while the world responded to the impact of the pandemic, which provided unexpected opportunities to see how these established partnerships reacted and adjusted to the impact of a crisis that affected their communities.

Three key findings emerged from the survey:

First, United Ways and community foundations overwhelmingly describe their relationships in positive terms. When asked on a November 2019 survey to describe their relationship to the UW or community foundation in the community, 47 percent described their relationship in only positive terms.

However, an equal number described their relationship using both cooperative terms and competitive terms. Expressing concerns about funding declines and sustaining organizational capacity, feelings of competition were also evident. Local United Ways and community foundations experience both competitive pressures and positive attitudes towards their local relationships.

And, finally, while relationships were viewed as positive, only 27 percent of the local organizations described their respective UW/CF as a partner.

A complicated relationship

Our survey suggested a paradox. While most organizations have positive attitudes toward their local counterparts, they do not always translate into cooperative action. To learn more about how local organizations support cooperative action, the research team studied communities in which local organizations were forging deep partnerships, despite competitive pressures. Our research took us to eight communities across the United States.

We found that these partnerships emerged out of a defining moment when the community faced an issue in which they realized that “partnership” was the only way forward. The partnerships took many forms, including information sharing, shared offices and staff, unitary governance structure, joint funding initiatives, and collaboration in formal community-wide collective impact initiatives.

Despite the diversity in the forms of partnership, the case studies identified common factors that contributed to strong and effective partnerships in such competitive environments. We learned that strong community partnerships are multi-faceted, complex, and develop over time due to deliberate individual, organizational, and community-wide action.

Organizational partnerships are embedded in community-serving relationships between leaders. Although not surprising, strong interpersonal relationships enable effective organizational partnerships.

One respondent indicated the level of importance they place on these relationships by saying, “…the quality of your relationships determines your success in everything.” Another one said, “build deeper relationships with people. Deep, caring, meaningful relationships with people, and they will come to the table again and again.” Leaders who built partnerships had already established relationships with other leaders respected and trusted by others in the community.

However, it wasn’t just that cooperative leaders were great people but rather that cooperative leaders took actions that made them great partners. Cooperative leaders “lacked ego” and shared a commitment to making decisions that benefited the community. Positive relationships among leaders were reinforced and supported with staff and board members through actions like joint committees and participation in community activities. Building and caring for relationships reduced the uncertainty of working with others.

Organizations build on their strengths to establish niches in their community. Although organization leaders were not oblivious to competition in their communities, organizations’ decisions to act cooperatively instead of competitively were intentional. Cooperative organizations focused on the bigger picture benefits of partnership.

Shared commitments to strengthening the local community through philanthropy allowed organizations to see how they complemented each other. By working in partnership, they found that they could create synergies and have a larger impact than they would if working alone. “Because the partnership was built … it’s become this vehicle to do things we never envisioned when we started putting it together.”

Rather than denying that competition exists, we found that cooperative United Ways and community foundations made deliberate decisions at various points in their organizational history to identify and negotiate the specific role that they would play.

Sometimes, that decision was made based on a niche that the other community organization already occupied. In other partnerships, these roles were decided based on the traditional funding or engagement role that the United Way or community foundation had historically played.

In some cases, there was an intentional decision made between the two organizations about who was better equipped or interested in addressing the identified community challenge. Establishing niches reduced the uncertainty over which organization was doing what and clarified expectations. The image below describes the variations and consistencies found across the eight communities related to focus, roles, funding, and impact across time.

Cooperative organizations are embedded in communities that invest in shared leadership.

While some may say that cooperation is “in the water” in their local community, we found that cooperation in local communities emerged from long-term community commitments to building shared leadership.

Cooperative organizations were located in communities in which community leaders, across sectors, had made intentional efforts to encourage and sustain collaboration in the community. Collaboration investments included a community commitment to formal and informal mentoring and willingness to communicate shared norms that “working together” was expected of all leaders.

Regular community meetings—such as monthly roundtables—that were not mandated by contracts or funding agreements, often served as safe spaces for information sharing, mentoring, and the development of shared values and visions.

Relationship building is difficult and some communities were able to invest in facilitators from outside the community who were able to help leaders build a stronger framework for effective partnership. Community investments created a safe space for leaders to interact, deepening partnerships and creating shared norms that partnership was valued in their community.

One respondent said, “It really isn’t about United Way or community foundation. It’s about this ability to come together as a community and focus on prevention with people from every sector: faith-based, entertainment, public government, the business sector … we all got together and agreed to figure out why or how do we work together so that we can actually start seeing some change.”

And then COVID-19

The team conducted additional interviews in 2021 to look at partnerships between United Ways and community foundations during the COVID-19 pandemic. We revisited many of our original eight communities and conducted interviews in six more communities.

In the early days of the pandemic, some United Ways and community foundations were in communication daily; sharing information, engaging in joint fundraising for relief and recovery efforts, convening other leaders across the sectors, facilitating the distribution of PPE supplies, and supporting public health efforts around mask and vaccination efforts.

These interviews supported much of the information gathered before and during the pandemic about the individual, organization and community factors that support strong relationships. The communities where these partnerships were intact pre-pandemic were poised and ready to respond in support of their community as the health and economic impact of COVID-19 became a reality.

However, as emergency relief efforts wound down, local United Way and community foundation leaders were already asking how do they rekindle the energy and passion for collaboration that emerged during COVID-19 around the existing community, such as early childhood education, health disparities, and inclusive workforce development? As one leader pondered, “what did we learn? What comes next?”

The full report contains more about the individual, organizational and community factors that helped build and maintain relationships between United Ways and community foundations.

Read the full report

Special thanks to the research team: Dr. Megan LePere Schloop (Ohio State University), Jin Ai (doctoral student, Lilly Family School of Philanthropy) and Lindsay Cart-Turner (master’s student, O’Neill School of Public and Environmental Affairs, IUPUI).

Are fundraisers givers?

Posted on December 15, 2021 by Andy Ware

By Genevieve G. Shaker, Associate Professor of Philanthropic Studies

“Never ask someone to do something that you wouldn’t do yourself” is common leadership advice. In fundraising this idea translates easily to, “Don’t ask others to give without giving first.”

The message is clear. Fundraisers should be givers themselves. This shows a fundraiser’s authenticity, brings added legitimacy to their “right” to ask, and puts fundraisers in donors’ shoes. But, do fundraisers live up to this advice?

To find out, I was part of a team that analyzed data from more than 1,600 U.S. fundraisers about whether they give and volunteer and how much. We discovered that fundraisers in the study were more generous with their money and time than people in general, with some nuances.

Researching fundraisers

Our survey, conducted in 2015, asked fundraisers a broad range of questions about their career paths and experiences. It was one effort to continue to build knowledge about the fundraising profession and the central role fundraisers play in raising mission-central funds for nonprofits. This research, on the philanthropy of fundraisers, is one outcome of the larger project.

We anticipated that fundraisers would give differently than the general public. This is because professional norms and ethics for fundraisers include a commitment to the public good and a belief in their own responsibility to be philanthropically generous.

Our survey had limitations, including most who responded were members of fundraising professional associations (i.e., AFP, AHP, CASE), so they were part of national fundraising communities rather than fundraisers without that connection to one another. Like all other studies of fundraisers, our sample was not nationally representative. Therefore, the research suggests information about all fundraisers but is not definitive beyond our participants.

Fundraisers’ charitable behavior

We discovered that 98.5 percent of the fundraisers had donated the previous year and had given an average of US$2,359. In that same year, according to the Philanthropy Panel Study, 55.4 percent of the U.S. population donated an average of US$1,364 (includes nondonors).

This means that the fundraisers were nearly 80 percent more likely to give and gave 73 percent more dollars. When we took out people who didn’t give at all and considered only the donors in both groups, fundraisers gave 5 percent less than all U.S. donors (US$2,397 compared with US$2,514). Considering giving as a percentage of income (fundraisers’ salary), we found that fundraisers were more generous.

Shifting from donations of money to time, 82.9 percent of the fundraisers volunteered as compared to earlier Panel Study of Income Dynamics data showing that 33.7 percent of Americans were volunteers. A large number of “super volunteers” in the general public (those who volunteered at least 100 hours per year) meant the general public volunteered more hours on average annually than fundraisers (41.1 hours versus 11.0 hours).

However, when the super volunteers were removed from the calculations, fundraisers volunteered more (10.1 hours versus 5.9 hours). Interestingly, fundraisers at the lower end of the pay scale were most likely to volunteer, and volunteered the most hours, compared with those making more money.

Giving before asking

In this study, we examined what fundraisers do with their own money and time. We learned that our fundraisers were indeed philanthropists. They did what they asked of others—they gave and volunteered, often more than other people.

We concluded that the expectation of generosity is deeply embedded in fundraisers’ understandings of their work. In a chicken or egg moment, we also wondered if people who were already charitably-inclined gravitated to fundraising or if as fundraisers they became acculturated to the norms of giving. Either way, there is much more research to do about the individuals who choose fundraising as their profession.

Empowered fundraising means asking others to give with pride rather than apology, according to Hank Rosso, founder of The Fund Raising School. Knowing that nearly all fundraisers are givers will make “prideful asking” that much easier.

This blog is based on a research article published in Nonprofit and Voluntary Sector Quarterly that is available through IUPUI ScholarWorks, and was written together with Lilly Family School of Philanthropy colleagues Sarah K. Nathan, Patrick Rooney, Eugene R. Tempel, and Jonathan Bergdoll.

Ways to give back in the Black church tradition

Posted on December 10, 2021 by Andy Ware

By: Stephanie Clintonia Boddie, Ph.D., MSW

“One gives freely, yet grows all the richer; another withholds what he should give, and only suffers want. Whoever brings blessing will be enriched, and one who waters will himself be watered.” – Proverbs 11:24-25

What I learned about giving I learned from the senior deacon at the Baptist church I attended as a child. He was also my grandfather.

The nickels, dimes, and quarters I saved during the week were just enough for me to give to the children’s offering, in addition to purchasing candy and chips my grandfather sold after church. In those days, a few coins went a long way. It was the ’70s, so you could still buy bubble gum or Mary Janes with a nickel.

When it was time for me to attend college, I discovered I would receive a scholarship from the church to help with books, some of that scholarship coming from my 10 years of giving to the children’s offering and purchasing treats from my grandfather.

Like so many Black churches, the church of my youth provided college scholarships. To the best of my knowledge, there were no scholarship or fundraising events to launch this fund. My grandfather was the silent architect of this program. Each nickel, dime, and quarter the church youth exchanged for candy and chips, my grandfather matched and used to create an account for a college scholarship fund.

The church also added the children’s offering to this fund. The youth of the church collectively saved for the future without knowing it. There were more than 10 of us during my college years that received a few hundred dollars from this scholarship fund. My grandfather’s way of giving cultivated a spirit of generosity in the church’s youth along with the development of a college scholarship fund.

This Black Church “tradition of mutual aid lay deep in the African heritage, which stressed a greater communalism and social solidarity” and is still needed to empower Black youth and their communities.

A history of giving

From its inception in 1750, the Black Church served as a vehicle facilitating the giving of Black people regardless of their station in life. While research on Black church giving is still rare, the practice is quite exceptional.

Black people typically give a larger share of their income to their congregations. In The Philadelphia Negro at the end of the 19th century, W.E.B. Du Bois, among the first to document the charitable efforts of Black Baptists, calculated those efforts as $100,377 for missions.

W.E.B Du Bois also found that Philadelphia’s 55 Black congregations amassed a total annual income of at least $94,968 and property valued at approximately $908,729, approximately $34 million in today’s dollars. Over 100 years later, Dr. Ram Cnaan and our team of the University of Pennsylvania researchers document in the Philadelphia Census of Congregations study over 700 Black churches offering a diverse range of programs giving back to both members and the broader community.

The financial impact of Philadelphia’s Black congregations has multiplied as the contribution of each one is now more than $900,000.

Giving back continues today

In Nashville, Tennessee, one Black church, Schrader Lane Church of God, has been multiplying its giving since 2000 through an asset building program launched with a predominately white congregation. This program offered through Christian Community Services Inc. continues to serve low-income/low-wealth families.

The Individual Development Account (IDA), a matched savings program established by Michael Sherraden in 1990, is the core component of their asset-building program. Here, church funding is leveraged to attract new public and private resources and matched 2:1 with the families’ saving funds.

Over 300 participating families have used their funds for homeownership, education, small business development, or renting an apartment. The demand for this program has increased during the pandemic.

In the recent Everyday Donors of Color: Diverse Philanthropy During Times of Change report, Una Osili, Ph.D., and her colleagues highlight the continued trends of Black giving closely linked to faith. Most notably, this research found Black households (50 percent) are more likely to give to religious organizations than Hispanic (41 percent), non-Hispanic White (38 percent), and Asian households (30 percent).

Study participants reported that after George Floyd was killed in May 2020, giving to support social justice causes increased across all racial and ethnic groups. In general, this giving was not sustained. However, faith leaders like Jamye Wooten are reshaping philanthropy with new ways to give to communities historically overlooked by elite donors.

In 2019, Wooten launched CLLCTIVLY as the first place-based social change organization to foster collaboration, increase social impact, and amplify the voices of Black-led organizations in Greater Baltimore. He draws from the Black Church tradition of giving and a long history of economic cooperative movements within the Black community to advance social justice fundraising and asset-building.

CLLCTIVLY’s 140-plus Black-led organizations pool resources to meet the needs of their members and the broader community through Funds for Black Futures projects and other participatory grantmaking activities. To provide relief for Baltimore’s Black-led businesses during the pandemic, Baltimore Ravens defensive end Calais Campbell and Rockefeller Foundation joined forces to give $200,000 through CLLCTIVLY.

With continued economic challenges for a disproportionate number of Black households due to the coronavirus pandemic, we can expect Black churches like the historic Alfred Street Baptist Church and Black faith leaders like Dr. Howard-John Wesley to create new ways to give and continue the legacy of Black church giving.

Stephanie Clintonia Boddie joined the Baylor University faculty in 2017 as an assistant professor of Church and Community Ministries with affiliations at the Diana R. Garland School of Social Work, the George W. Truett Theological Seminary, and the School of Education. Boddie is also a non-resident senior fellow at the University of Pennsylvania’s Program for Research on Religion & Urban Civil Society, a faculty associate at the Center for Social Development at Washington University in St. Louis, and a 2021-2022 Villanova Church Management Research Fellow.