We have a DAF problem.

Donor Advised Funds (DAFs) are tax-savvy, easy to set up, and accept a variety of asset types. It is no wonder they’re the fastest-growing donation vehicle. In fact, more than $250 billion is held in DAFs nationwide, 89% of which resides with commercial providers such as Fidelity, DAFgiving360 (Schwab), and Vanguard.

Too often, however, this capital isn’t reaching the nonprofits that so desperately need it. With DAF assets hitting all-time highs in 2023, the need is more urgent than ever to ensure these philanthropic resources don’t get stuck sitting in accounts where they’re viewed simply as part of a donor’s financial portfolio.

Community foundations can lead the way in unlocking these resources—and the Minneapolis Foundation is completely focused on doing just that. We see the DAF problem, and we see the opportunity.

Donor Advised Funds are a powerful tool for democratizing philanthropy and empowering donors to strengthen their communities. Yet many DAF providers are missing the critical step of helping donors connect funds with the community.

In a common scenario, an individual works with a financial advisor to open a DAF and walks away thinking, “That’s it. I gave my money away. I got my tax benefit. Now I’m a donor.” This capital, which is generously intended to do good, overwhelmingly sits with DAF providers, failing to reach the people and organizations that need it most. The result? Generous people never take the crucial step of transforming their charitable intent into impact.

Simply put, watching a Donor Advised Fund grow is not the endgame. These funds are meant exclusively for charitable purposes, and their power is in their potential for impact. Yet without a plan for designating funds, nonprofits and the communities they serve are unsupported by well-meaning donors.

The Minneapolis Foundation is committed to moving philanthropic capital into the community and expanding on the incredible generosity of our existing fundholders, who last year alone joined us in distributing nearly $114 million in charitable gifts.

We know our community’s needs are even greater, and so we must do more. That’s why the Minneapolis Foundation set a goal of more than doubling the resources going into the community in the next 10 years.

How will we do this? By providing each and every one of our fundholders with the customized tools and support they need to translate their philanthropic goals into action.

The key to our work is engagement. All our services focus on bringing donors closer—to the communities and causes they care about, to the values that drive their giving, and to new ideas that can inform and inspire their philanthropy. As they move through this process with our team of Philanthropic Advisors, donors transform from contributors to changemakers.

The Minneapolis Foundation offers resources and experiences you won’t find at commercial DAF providers, creating pathways for donors to learn, connect with others, and expand their vision of what’s possible. From convenings and research to family philanthropy and co-investing, we provide tools and experiences that spark more impactful work.

We know that other community foundations are committed and ready. We’re here to connect with others in the work and share what we’re learning along the way. By embracing our roots of bringing people together with their local communities, community foundations are in an ideal position to connect donors with causes they care about and help them turn their charitable intentions into reality.

If you are a community foundation working to engage more deeply with your Donor Advised Fund holders—or if you are a donor looking to make your Donor Advised Fund matter more—please reach out at chrisbeach@mplsfoundation.org.

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Chris Beach
Senior Vice President, Philanthropic Services