Myth Busting the Anonymity of DAFs

"Hello, my name is anonymous" by quinn.anya is licensed under CC BY-SA 2.0.

In my role as Managing Director for DAFinitive®, I talk to a lot of people about DAFs.  A lot.  Mostly, the people I interact with are development professionals working at non-profit organizations or folks like me who work for a for-profit company that services the fundraising space.

In my conversations, the topic of donor anonymity invariably comes up.  In most instances, the person on the other side of my Zoom screen, phone call, or in-person meeting says something to imply that they believe that the donors who choose to use DAFs as their giving vehicle are largely driven to do so by how easy it is to remain anonymous.  The sense I get is that many believe this is a pervasive and growing issue in our industry.

I’m here today to argue that this assumption is a fallacy. 

Sure, some donors do use their DAFs to foster anonymous giving – but it’s certainly not THE reason.

Studies show…

To quote Helen Brown’s DAF Assumption Surprises blog post from last year, “Conservative think tank, The American Enterprise Institute (AEI), was given access to anonymous donation data from 2019 and 2020 from the five largest DAF sponsors: Fidelity Charitable, National Philanthropic Trust, Schwab Charitable, Silicon Valley Community Foundation, and Vanguard Charitable. Like a lot of us, AEI was interested in learning where anonymous DAF donations were actually going. 

“In their white paper Anonymous Giving Through Donor Advised Funds (January 2022) AEI reported that, of the 2,256,033 total grants made in 2020 from donors through the big five sponsors, only 4.3% of those gifts were given anonymously.

In case you are concerned that the data from the AEI study is a couple of years old, Fidelity Charitable, one of the five sponsors in the AEI study and the largest sponsor in the US, noted in its 2023 Giving Report that “most [81%] grants include donor names and addresses so the recipient organization can acknowledge the gift. A handful [15%] of grants share the name of the donor’s Giving Account, while only 4% are completely anonymous.”  So, these findings remain consistent with the AEI study.

And, across the northern border, in Influence, Affluence and Opportunity: Donor-advised Funds in Canada, KCI and the CAGP Foundation found that for DAF donors, anonymity was unimportant relative to other factors in choosing to use DAFs.  In fact, almost all donors stated that they are very interested in building relationships with the organizations they support.

If so few donors giving through DAFs are actually trying to remain anonymous, what’s the disconnect?  And, why does this myth persist?

To start, and quoting Helen’s post again: “one of the underlying issues may be the use of the word “anonymous” here. While the DAF sponsor forwarding along the gift from “The R & C Donor Advised Fund” may not technically consider that donation to be anonymous, for all intents and purposes from the nonprofit’s point of view, it might as well be – unless they happen to know who R & C are.”

This is at the core of the issue: non-profits want to (and are trying to) steward their donors appropriately.  Most donors want (and are both expecting and waiting) to be stewarded by the organizations they support.  The lack of proper stewardship is frustrating to both the non-profit and to the donor.  It strains the relationship on both ends.

Cause and Effect

Recently, in a call with a leader from a DAF sponsor organization, the person shared with me that until recently, they didn’t have the infrastructure in place to systematically share donor contact information with non-profits.  In essence, when a DAF gift was being fulfilled, it was treated solely as a financial transaction from the sponsor to the receiving non-profit organization. 

This sponsor understood that they had a problem and prioritized the investment needed to update their systems and processes to provide a more holistic experience for both the donor and the non-profit.  Now, end-to-end sharing of donor information is possible for them.

It is unclear how many other sponsor organizations have this same challenge, and it is even more unclear how many of those who do are making the decision to invest in a solution.

Interestingly, this issue of donor transparency is not unique to donor advised fund gifts.  If we pull out the lens a bit, we’ve likely all experienced similar challenges with gifts that come through other intermediary entities.

For example, I know I have personally experienced issues where matching gifts funds were not attributed to me as soft credits because the non-profit did not know who was on the other side of the matching gift check that they received from my former employer.

I’ve spoken to colleagues at non-profit organizations that share that they are often similarly flummoxed when a gift of stock arrives from a brokerage firm without an individual donor’s name attached.

And, The Giving Block’s 2023 Annual Report on Crypto Philanthropy notes that there is also a misconception that donors who use The Giving Block to give via cryptocurrency do so to remain anonymous.  In fact, the vast majority (79%) of donors using The Giving Block ask to share their details with the receiving non-profit.

So, what are we to do?

There are likely many solutions to explore but throwing our hands up in frustration is not one of them.  I’d like to offer two, both focused on education and understanding.  Let’s make this an industry-wide conversation!

First, if you work for a non-profit organization, team up with your marketing department to ensure that your communications are encouraging donors who give through alternative or intermediary giving vehicles to notify you directly of their gift.  You can do this on your website, in your direct marketing appeals, and on your donation forms and reply devices.  It is likely that many donors assume that you know when their gift arrives, just like I did with my matching gift experience.  If they do not realize that you may be having a challenge identifying them, you aren’t giving them a reason to help solve the problem.  Remember, most donors give to missions they care about and they want to be thanked for their support.

Ultimately though, many would agree that this shouldn’t be the donor’s “problem.”  Instead, as an industry we should be focused on how to best serve donors.  Regardless of the type of company or organization that is serving as a DAF sponsor, they all share something in common: the responsibility to help foster philanthropic giving.  Part of the philanthropic process is the appropriate stewardship of gifts and relationship building with donors.

So, if you work for a DAF sponsor, take a note from the sponsor that I talked to recently: prioritize how to make communication and transparency with non-profits more thorough and robust.  The non-profits receiving DAF gifts want this from you.  And, maybe more importantly, your clients – the donors and advisors of the DAFs you are sponsoring – want it too.  You will be strengthening your relationship with clients while also enabling a stronger relationship between the nonprofits and their donors.