power and privilege in fundraising

We recently wrapped up a three-part webinar series titled “The Future of Fundraising” with our friend, Paul D’Alessandro. This series covered three topics; Key Insights into AI and Donor Privacy, A Strategic View of DAFs, Blockchain, and Impact Investing, and Exploring and Understanding Needs of Fundraisers and Donors.

There were many great questions from our attendees! In fact, we had so many questions we weren’t able to cover them all live during the webinar. Paul has graciously provided answers to your questions, please find them below!

Q. Are DAF assets invested in the same way that foundation assets are? 

A: Yes, the assets are managed mostly by money managers. The same goes for endowments.

Q. Besides continuing to build relationships with individual donors, is there any way we can support or encourage DAF funders to give from their funds to our organizations?

A: Most DAFs have policies about what they give to like community foundations. Remember, the DAFs are individual accounts that people send funds from at their choosing and sometimes with the guidance of the Fund itself. There are surpluses now that allow disbursement based on their giving policy. For example, Fidelity Charitable has its own giving initiative.

Q. What happens to money placed in a DAF when the person that placed it in it passed away?

A: It depends on whether the donor left instructions on who can now make the recommendations of where the gift goes. If no document exists, the money goes into the supporting organization like Fidelity Charitable, if that is where the donor’s DAF is located.

Q. How do you find the DAFs?

A: iWave has a tool to help you find them. Some DAFs have annual reports with a list of donors. I would start with your local community foundations and see if they identify donors with funds. Remember, the DAF is raising money to add to its largess with assets under management so they basically are looking for donors too.

Q. Is it actually legal for a controlling organization to deny a donor-advisor the ability to recommend funds be directed to any specific charitable organization, such as the NRA, as you referred to, just because the controlling organization is opposed to the “mission” of the charitable entity?

A: It is within their right since they are the owners of the funds to deny gifts to certain charities if they feel that that organization is violating the law or has ethical issues. It’s doubtful they would deny in principle based on the mission unless it went against best practices in the sector

Q. If the entirety of the DAF is not distributed, what happens with the remainder upon the donor’s death?

A: It goes to the supporting organization like Fidelity unless the donor has a succession plan written out. Therefore, it should be part of a donor’s estate planning.

Q. Do wealth screening products have the ability to connect DAFs back to the individuals who create them?

A: I believe in some cases they do. Most of the DAFs are in individual names so they are easy to identify if you can see a list of funds.  It’s not as easy with Fidelity, Schwab, NCF and the bigger ones, as they have billions in assets. It’s best to assume, if you have a sophisticated high-net-worth donor, that they have a DAF.

Q. You mentioned if the DAF donor passes away it goes to the org that runs the org. But what happens if it is held at Schwab?

A: If it’s held at Schwab Charitable, it goes to that supporting organization.

Q. How many years will the DAF go back?

A: It’ll go back to the beginning. Some were set up and no monies have ever been distributed.

Q. Any suggestions – books, articles – to learn about blockchain?

A: Since it’s such a technical issue my suggestion is to read articles on the web that tie blockchain to philanthropy. Understanding blockchain and smart contracts in the broadest sense will help with knowing how it works and how it can benefit you. The details, however, are not needed. I do most of my reading online, in addition to books on AI and technology.

Q. How is the value of crypto currency determined? On what is the value based?

A: Like the value of stocks – supply and demand.  There are limited amounts of coins in each crypto.

Q. Great talk! Do you have an example of a crypto policy for a nonprofit available? I’ve been hesitant to engage with crypto for my org. 

A: I don’t but it would fall in the same line as receiving stock or closely held stock into your organization.  You have to decide whether you are going to hold it as an investment and sell over time or as most people do – sell upon receipt.

Q. Where/what is the tax advantage for a crypto donor?

A: It’s the same as stocks.

Q. Is there a way to find out whether a specific family/prospect has a DAF? For example, if we search a specific name, will their DAF come up under the giving section?

A. I don’t think so, but this is a question for iWave. The funds have been transferred to a separate entity and distributed from that entity. If you get a check from a DAF and you know who it’s from then enter into your database.

Q. Regarding impact investing, are there regulations about the type of organizations that can take advantage of this?  For example, how would it vary for higher ed, health organizations, small non-profits, etc.?

A: There are no rules about this as it is a private investment. The rules come around PRI (money from foundations), SRI, and MRIs. If you heard me read the list of projects, you can see there are more and more each day. The ones I am working with pay a 15% return on the investment.

Q. Is the nonprofit model broken? I see for-profit companies for good doing their own boots on the groundwork, and sometimes I think that is where we should head.

A: I believe it is and we need to have a major change. This is why I will be disrupting the space by challenging old notions. For example, I understand why boards need oversight of a nonprofit but does a board really help or hinder the work that has to be done. There are much better accountability measures given technology then what was set up a long time ago.

Q. Impact investing vs. altruism? I think the question is more – do I trust a nonprofit to make the changes or is there a better way?

A: Nonprofits are businesses – some people won’t give but they will invest so you can have the best of both. The concern is that as impact investment funds surpass the success of nonprofits what will happen to altruism. There will always be poor among us. So, how we help is up to us and those with the resources to make a difference.

Q. If a “profit” is made through impact investing, how does that affect the charity’s non-profit status?

A: It doesn’t. It is an investment that provides a return to the investor and accomplishes a mission driven goal at the institution. My feeling is that nonprofits need revenue generating vehicles to sustain themselves beyond charitable gifts. 

Q. What was it like working in the development shop at Notre Dame?

A: It was a blast when it was a small shop. Loved the people and donors. Ironically, when hired I was told that I would only travel about 30% of the time. After 2 years, I was gone 70% of the time running the Southeast and Caribbean. You have to be willing to get out the door and go. I learned so much and am grateful that was my start. They invested in my success and gave me the tools I needed to be successful.

Q. Do you think the “woke CEO” movement (i.e., CEOs taking activist stances against political decisions) could affect DAF holders and, thus, the charities they choose?

A: I think so, but the donor still gets to decide where the money goes.  There are so many political charities now. It seems as even in the nonprofit space there is a left and a right movement with money pitted against money.

Q. I was just promoted to Director of Development to a 60+ year old disability services organization. They have a $26 million dollar operating budget. Because their fundraising has been very dependent on events (I’m changing this) they have zero donor portfolio, the largest gift is annual $5,000 and we JUST brought on a donor CRM. Where do I start?

A: The best place to start is finding a company like iWave to run data on everyone  who has gone to an event. You will need to start having conversations with the few donors you have about why they give and any thoughts on other people or organizations that may want to hear the story. I would spend as much time up front building a list from scratch. I’m happy to help you with this if you want to schedule an hour on our website: www.highimpactnonproft.com

Q. What is a good title for a major gifts officer? We are looking at creating a position to focus on individual major donors, and I agree that xxx of Major Gifts can be a turnoff for prospects.

A: Director of Donor Relations, Stewardship Director, VP of Stewardship, VP of 

Strategic Partnerships. Look at successful nonprofit sites and see what titles are used. What you have on your card isn’t what has to be on the internal organizational chart.

Q. have found that consultancy actually works better than full-time employment within an NPO (based on experience of 30 years in NPO leadership/philanthropy)

A: This can be a good bridge to finding the right person in house or a strong long-term relationship with a consultant.

Q. We are a nonprofit organization who has been in existence for a long time but has never moved in the direction of fundraising.  We have no donor database, do have a small following on our Facebook page, an excellent staff involvement with our employee giving program.  We are looking at building a new residential building for low income seniors with a campaign target of $8M.  We know there is a need in the community as there is a shortage of 600 low income unit in our City.  We have put together a Friends of Bridges Committee to get the ball rolling.  What do you think should be our first priority? The board of our organization has never donated anything to our organization nor have they been asked!  

A: 80% of campaign mistakes happen at the outset. The first priority is having a clearly articulated case so that everyone understands. Leadership has to give something even if $1,000 each – donors want to know the Board is invested. If not, then you will need to find new leaders who will wind up on your board. You have a case given the scope of the project. Successful campaigns requiring planning. We say, plan, plan, plan and implement and be adaptable to changes that come up. Visit the following for some essential capital campaign thoughts: https://www.highimpactnonprofit.com/resources/capital-campaigns/ 

Watch the whole series here: Part 1, Part 2, & Part 3

High Impact Nonprofit Advisors