I recently participated in a conversation thread on social media around the recognition of a donor who created a donor advised fund with a financial institution. The finance professionals on the thread were confused. Why were charities reluctant to recognize donors for a fund that was created within the financial institution’s charitable entity?
As a fundraiser, there was no confusion for me at all.
Charities recognize individuals or organizations (corporate or otherwise) who give a donation to them. That is relatively simple and straight forward. They also recognize donors by the type of gift they give (annual, major, planned) at the level of the donation.
Anyone working in fundraising knows about stewardship and recognition programs and the associated “giving levels.” (Again, rather straight forward.) This is how charities operate.
What was confusing to the financial professionals involved in the LinkedIn discussion is why charities were sending recognition to the financial institution when it was their client’s fund that made the gift? And frankly, in the conversation, some of the comments indicated more than just confusion, they seemed a little angry about it.
In the end, this conversation revealed a core issue with donor advised funds. They are not a direct gift to a charity. I know this may seem obvious. But, does the client of the financial institution understand this nuance? Does the financial professional?
More importantly, does the donor understand that they are NOT making a substantial one-time donation to the charity the financial advisors were looking for stewardship from (assuming the charity of choice gets any money from the “advised” funds that have been transferred). Rather, they are starting a long-term donation process of regular, smaller contributions to the charity—a type of contribution that would normally fall under the annual giving program’s recognition and stewardship NOT the major or planned giving recognition programs.
Yes, these gifts may end up accumulating to become a truly substantial contribution to the charity. Only time will prove that to be true.
My questions are this:
Identifying the source of this confusion will be the first step to providing a better philanthropic experience for our donors/clients.
I would be happy to host a discussion on this topic between charity and finance professionals on The PGgrowth Podcast. We could also present jointly at a conference on the topic. I am up for it. Let me know if you are!
Ed Sluga, CFRE is one of Canada’s most experienced planned giving professionals and is also co-founder of PGgrowth. Ed is a noted speaker, the co-author with Peter Barrow of Worthy and Prepared, host of the PGgrowth Planned Giving Podcast, Professor of Major Giving and Planned Giving with the Humber College Fundraising Management Program and a regular presenter of the AFP Fundraising Fundamentals Course. Contact him, ed@pggrowth.com
