We don't have DAFs here, but at my previous job we had about 100 DAFs and about 800 junior DAFs for a special teen philanthropy program. (I would not advise a junior option without a really good exit plan - biggest headache ever.) I managed the DAFs there as part of my job for 15 years. It was all managed in-house. Consider regular distributions, reporting and the disproportionate number of recommendations at the end of the calendar year because that is when people are accustomed to making their annual gifts.
We did not have an online portal for donors to make recommendations. If you are going to get into DAFs and mange them internally, I'd look into a system with an online portal. It will simplify your life - especially for donors who request recurring grants from their DAFs or want to provide specific instructions for the use of the grant.
We used Guidestar (now Candid) Charity Check to check the 501(c)(3) status and saved electronic copies of the PDF file as proof that it was checked. I haven't come across a database that lets you update that information by grant, only by grantee. Once you've updated it for the current grant, you have no electronic record of verification for previous grant cycles.
We accepted requests by mail, email or an online form. We sent a confirmation when a request was received and when the check was mailed. (This is where the online portal would have been helpful.)
All of our documentation stated that recommendations were subject to approval by the Board and that recommendations to organizations that had policies that were in conflict with our mission statement would be rejected. If I anticipated that a recommendation would be rejected (because it didn't qualify as a 501(c)(3) or there was a conflict) I would notify the donor immediately to give them a chance to withdraw before it went to the subcommittee of the Board for review. If the subcommittee rejected a request for a reason other than not being a qualified 501(c)(3), it went to the full board. It is always better for the donor to withdraw a request than to have to decline it.
You also need to consider customer service issues with DAFs. Some people wanted to hand-deliver the check or mail it with their own note. You'll need a policy for that. Be prepared to get questions that you can't answer: why didn't I get a thank from John Doe for my gift to the ABC organization in their honor? Why didn't my thank you from XYZ Foundation state that my gift went to the program I directed it to?
You will also need a system to make sure that the grant checks are clearing in a reasonable period of time to make sure the grantee received the check. We were checking for outstanding checks at least quarterly - contacting the intended grantee to see if they received it, and putting stops/replacing the checks as necessary.
In addition to a quarterly fund report, we sent a year-end letter that included a list of contributions made to and grants paid from the fund. (Again - an online portal would have saved this time and effort.)
DAFs are a lot of work - especially if you have a low minimum balance. Consider what it will cost to manage the additional work load. Will you need to add a staff person? If you are outsourcing - that will have a cost as well. Some organizations will manage your portfolio while others will require you to transfer ownership to their foundation. In either case, they can be as expensive (or more expensive) than hiring a staff person to manage the DAFs.
If you have specific questions, please reach out to me directly at
lanctom@elms.edu or 413-265-2403.
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Michelle Lancto
Director of Advancement Services
Elms College
lanctom@elms.edu------------------------------
Original Message:
Sent: 11-22-2022 07:59 AM
From: Tara Zoltek
Subject: Anyone who works at an org that created your own Donor Advised Fund? - have questions
My organization is doing research on establishing our own DAF and would like to find out more information on the administrative workload for having your own DAF product that you offer to individuals. If anyone works at an organization who offers this, I would greatly appreciate connecting.
Information I am seeking includes, but is not limited to: how payment requests are handled in terms of researching and verifying 501c3 status etc., any policies you may have about who the DAF will/will not issue distributions to (like if you have types of orgs your DAF will not issue payments to), staffing around managing the DAF on the admin side, etc.
As my role is heavily involved in DAFs, I want to see how much Advancement Services should plan to be a part of this and/or what outside staff would be needed.
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Tara Zoltek
Director of Advancement Services
The Haverford School
tzoltek@haverford.org
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