Donor Advised Funds for Churches

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Last week, we talked about the rising popularity of donor advised funds—but should pastors and church leaders be pushing this as a financial tool for their people? Absolutely.

For most churches in America, giving is done in the same straightforward manner as it’s been done since the Pilgrims landed at Plymouth Rock.

Church members gather to worship. They bring cash (or checks). They place their money into a collection box, bag, or basket. And this process repeats itself 52 weeks (minus snow days) every year.

Let me be clear right up front: There’s nothing wrong with this method. Please don’t stop doing it in your church if that’s your traditional approach to discipling your congregation into generosity.

But this method does have some flaws, both theologically and practically.

Flaws in Weekly Tithe Collection

Flaw #1

When you “pass the plate,” some people might feel compelled to give, yet in Scripture we know we’re supposed to give “cheerfully.” Coerced generosity doesn’t work in God’s Kingdom.

Flaw #2

Most people do not attend all 52 Sundays—including the pastors! So when you collect the gifts from your people on Sunday morning, you will unavoidably miss potential gifts from those absent.

Flaw #3

More people are choosing to go cashless, and only carry cards. Of course, you can place giving kiosks in the building and set up your online giving processor on your website. But you still will miss people who don’t show up every Sunday—and some people are in such a hurry that they fail to visit the kiosks before or after service.

These flaws are nothing new for a pastor like you. I’m sure you’ve even had a conversation or two with your deacons or elders about how to optimize the part of the service where you receive the tithes and offerings.

And, again, these are not “deal breakers” in my mind.

Passing the plate is an honored, time-tested way to sustain the church, cultivate a spirit of generosity in your people, and worship the Lord corporately through giving.

But if I could give you a stewardship tool that would solve all of those problems—wouldn’t you jump on it?

Take a look at how donor advised funds can drive the mission of your church. Share on X

There is such a tool! Donor advised funds.

Donor Advised Funds and the Church

There’s been more and more talk about donor advised funds (DAF) in the philanthropic community lately. It’s becoming a common stewardship tool.

In fact, since 2010, the amount of money contributed to DAF’s has increased by 300%!

So you might have already heard about them. (If you need a quick primer, please see my previous blog post.) But you may not have heard that your church members and your church can benefit tremendously from using this financial stewardship tool.

Check this out! Churches have so much to gain when members use donor advised funds. Share on X

Almost every DAF provider I know of allows donors to gift the money they contribute to fund religious institutions. The rare exception might be a community foundation that restricts the grants donors can make to local or economic causes.

But there are also excellent Christian DAF providers that you can refer your people to that will help you reinforce biblical stewardship values in the lives of your people. And, of course, they will allow your congregants to give to your church through their DAF’s.

Two Christian foundations I highly recommend are:

Setting up a DAF with a Christian foundation does not limit your church member to give to only Christian causes or churches. With regard to Waterstone and National Christian Foundation, I know that as long as the charity you’re giving to is not antithetical to biblical, Christian values, they’re fine writing checks to a state university, hospital, or other causes.

This flexibility is important because while you want your church members to give faithfully to your church, you want them to have the freedom to support the other issues God has placed on their hearts.

But by promoting the use of donor advised funds among your church members, you can smooth out the peaks and valleys in your church’s cash flow because DAF’s urge donors to be proactive and intentional about their giving.

DAF’s also assist your church members in being consistent in their giving—even when they’re not in attendance every Sunday morning.

Using Donor Advised Funds as a Discipleship Tool

Another reason I encourage pastors like you to promote the use of donor advised funds is that church members can easily use them to teach their child the ways of generous living by making their children advisors to the fund. There are several ways to do this.

The first way is that you could set up a donor advised fund and appoint your children as advisors. This way, you can make decisions on where the money should be given in real time with your children.

Using a DAF, you would be providing your children practical experience in administering Kingdom finances—and you would be there personally to guide them!

The other way is to set up a DAF as a part of your estate planning to try to use that as a mentoring vehicle for your kids on helping them grow in stewardship after you die.

For example, in your estate plan, you could give your children the inheritance assets directly that you want to give them—but then also deposit $10,000 or $25,000 into a donor advised fund account and appoint your children as the advisors to that fund.

By being the advisors to the DAF your estate created after you pass on, you’ve created a way to launch your children into the practice of biblical stewardship, even when you’re not physically present with them.

Donor Advised Funds Are a Great Resource for Churches

Donor advised funds are a HUGE blessing for churches, church leaders, and church members. Don’t miss out on this easy-to-use stewardship tool!

Encourage your people in your stewardship sermons, series, or Sunday School classes to go to National Christian Foundation or Waterstone and open up a DAF. This will help you and your people match up your giving habits with your biblical convictions.

Want to discover more stewardship tools like this to fund your church’s mission? Let’s talk!

Donor Advised Funds: The Best Financial Tool for Consistent Generosity

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Too many people live reactionary lives, tossed around by the latest round of circumstances life throws at them, especially when it comes to their giving. But there’s an easy way to get control of your giving—donor advised funds!

Like most generous people, you probably have a set of values that drive your philanthropy. Whether you’re writing million dollar checks for capital campaigns or giving a one-time gift of $25, there are reasons why you’re giving your money to that particular cause.

Giving is where the tangible world of money and assets meet the intangible world of altruism, kindness, and faith.

In fact, generosity must be driven by conviction because the giver gets nothing tangible out of the transaction.

The only thing you and I get when we give is the satisfaction of knowing we have lived according to our convictions.

But life can and often does get in the way of our convictions.

Convictions, Generosity, & Joy

Throughout life, people find themselves in the middle of circumstances where everything that could go wrong, does. These rough patches in the road often interrupt their giving habits. Or, they get so busy working and raising a family, that giving just wasn’t at the top of their priority list.

Be proactive and intentional in your generosity so that your giving truly reflects your convictions. Share on X

For those who believe they have a responsibility to steward their God-resources, this fluctuation in their giving violates their conviction. The result is that their satisfaction—their joy—wanes.

Instead of being proactive in their giving, they start giving reactively.

But there is a fantastic financial tool that can help you get out of this cycle — and stay true to your philanthropic and biblical values.

Donor Advised Funds

Since the 1980s, donor advised funds (DAF) have been making philanthropy simple for many donors. You can see this is the rising popularity of their use. Since 2010, the amount of money contributed to DAFs rose by 300%!

Since 2010, donor advised fund contributions have risen by 300%. Are you leveraging this financial tool? Share on X

Donor advised funds are so simple, I call them a “charitable checking account.” Opening a DAF is like having a private foundation without all of the expenses, headaches, and ongoing annual reporting that a private foundation requires.

Donor advised funds allow you to put in cash or assets like appreciated stock, publicly traded stock, real estate interests, business interests, and even dividends from oil, gas, or water rights.

It’s incredibly flexible.

For example, you can put in a piece of land, an apartment building, or rental property, and it allows you to sell the asset inside a tax-exempt environment—exactly in the same way as if you were giving it to a mission agency, college, or church. Because they’re a tax-exempt entity and therefore they could sell this and appreciate the asset tax-free.

When you open a donor advised fund, you enjoy several key benefits:

  1. You enjoy the tax-free environment of a nonprofit,
  2. You get the fair market value deduction of the gift,
  3. You get to advise on the grants given from your DAF, and best of all,
  4. Your cash and asset-based giving along with the required paperwork are simplified.

Now we’ve already touched on the idea that you can sell your assets tax-free within the donor advised fund, just as if you had donated that asset to charity. But let’s dive into the tax deduction with an illustration to show you just how much a DAF can improve your financial outlook at the end of the year.

Fair Market Value Tax Deductions from DAFs

Let’s say you put a stock asset into your DAF, and at the time of purchase, you paid $10,000 for that asset. Now let’s say that asset’s value has risen and it’s now worth $50,000.

If you sell the asset, you will save yourself the taxes you would have otherwise paid on $40,000 worth of long-term capital gains. And you will receive a $50,000 deduction on your taxes that same year!

Now that money is sitting in your “charitable checking account.” And you can direct, or rather, you can advise on where the money will be given.

You’ve given up legal control. You can’t demand that the money goes to a specific charity, but you can advise them. Unless you recommend a charity outside of the protocol, bylaws, or boundaries of your DAF provider, then they are going to follow your advice.

If you think you might be giving to something that is a little edgy, you should check with the donor fund provider in advance.

But the beauty of this is that the DAF allows you to sell your asset tax-free, get a deduction, and now make gifts to your different charities out of one pot instead of going through the expense of setting up a private foundation, and then having an audit, keeping up with the accounting, and so on.

Convenience. Consistency. Convictions.

This leads me to the final (and to me, the best) benefit you will experience in using a donor advised fund. Simple, easy accounting and taxes.

As I write this post, it’s tax season. Specifically, it’s the first week of February. I’ve already received my annual report from my donor advised fund provider.

Back when I gave the majority of my gifts to charity by writing each charity checks from my desk, I had to wait for each of them to get their summary of my giving for the previous year to me. Some would be very prompt, and some not so prompt.

This has caused friction for me as I prepared my tax returns.

That friction can add up and stops a lot of people from giving to their full potential. The more charities they give to, the more time they spend working out the accounting and tax details. There’s a point where it’s simply not worth it!

But with a donor advised fund, my wife and I have a tool that makes the administrative work simple and lets us live out our convictions around biblical stewardship.

And because our DAF helps us be proactive in our giving, we are less vulnerable to the “emergencies” or distraction that are bound to happen in life.

If you’re interested in opening a donor advised fund to simplify your philanthropic life and keep you consistent with your convictions, I highly recommend the following DAF providers:

Interested in discussing your options in asset-based giving? Let’s talk!

The call is free, and there’s no obligation.

Analysis of a Successful Capital Campaign

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Fundraising has a long and honorable history — and it all started with asset-based giving. In this case study of an ancient capital campaign, I want to show you how to reach your funding goals through gifts of assets.It’s easy to think capital campaigns are an invention of modern society. But as Exodus 25:1–9 demonstrates, capital campaigns have furthered God’s work for millennia.

“The Lord said to Moses, ‘Tell the Israelites to bring me an offering. You are to receive the offering for me from everyone whose heart prompts them to give. These are the offerings you are to receive from them: gold, silver and bronze; blue, purple and scarlet yarn and fine linen; goat hair; ram skins dyed red and another type of durable leather; acacia wood; olive oil for the light; spices for the anointing oil and for the fragrant incense; and onyx stones and other gems to be mounted on the ephod and breastpiece. Then have them make a sanctuary for me, and I will dwell among them. Make this tabernacle and all its furnishings exactly like the pattern I will show you.’” Exodus 25:1–9 NIV

Why is this bit of ancient history so interesting? Because of the phenomenal results Moses saw!

“Then Moses summoned Bezalel and Oholiab and every skilled person to whom the Lord had given ability and who was willing to come and do the work. They received from Moses all the offerings the Israelites had brought to carry out the work of constructing the sanctuary. And the people continued to bring freewill offerings morning after morning. So all the skilled workers who were doing all the work on the sanctuary left what they were doing and said to Moses, ‘The people are bringing more than enough for doing the work the Lord commanded to be done.’

Then Moses gave an order and they sent this word throughout the camp: ‘No man or woman is to make anything else as an offering for the sanctuary. And so the people were restrained from bringing more, because what they already had was more than enough to do all the work.” Exodus 36:2–7 [Emphasis mine]

Not only did they reach their goal, but they also had to restrain people from giving more because they already had enough! Those are incredible results.

So what was it that Moses did to achieve those results? What made this campaign successful?

Fundraising Is Not Dirty

First of all, Moses had a healthy understanding of wealth and giving. He understood the principles of godly stewardship and the benefits of giving both to individuals and the nation.

Fundraising is not a sleazy practice or transaction for those who have faith in God. In fact, God was the one who initiated this capital campaign!

Unfortunately, too many faith-based organizations and churches have negative feelings about asset-based fundraising, feeling as though they’re taking away someone’s hard-earned assets. But the truth is that giving is beneficial for both the giver and for your organization.

  • Understand the concept of biblical stewardship on a whole new level,
  • See the possibilities of changing their tax liability,
  • Uncover the full impact they could make possible, and
  • Make their greatest impact now rather than waiting until they die.

Clear Vision

God gave Moses clear instructions on what to do. Moses then shared the vision of a dwelling place for God to the people.

It was clear. The way Moses described it to the people painted a picture in their mind of the future in vivid colors and precise measurements.
There were no vague promises here. Everyone knew the progress of the campaign and where the money went. The clarity built donor trust and excitement around giving because the people could see what their gifts were doing to create change.

Cheerful Givers

There was no manipulation or extravagant gimmicks to Moses’ capital campaign because the vision itself was so compelling that people gave out of the willingness of their hearts.

Now when I say there was no manipulation, I don’t mean that no one coerced their neighbor into giving, although it’s true that there was no coercion in their campaign, in fact see the context, “You are to receive the offering for me from everyone whose heart prompts them to give.” What I do mean is something much more profound and intuitive.

I mean that there was no manipulation of the people’s desires.

The Tabernacle was something the people wanted. The vision was not contrived or forced upon the people (e.g., “You should care about this because it’s the right/Christian thing to do!”).

The vision of Moses’ capital campaign aligned with the values, goals, and desires of the givers. The Israelites wanted to get in on God’s plan.

When your campaign lines up with the aspirations of your #donors, they will respond generously. Share on X

When campaigns line up with the aspirations of your donor base, they will respond generously. After speaking to so many donors in organizations like yours, I know for a fact that many of your people want in on God’s plan just like the Israelites.

Asset-based Giving Equalizes Opportunity

Because every gift in Moses’ campaign was in assets, not currency, both rich and poor alike could participate in the building of the Tabernacle. Everyone could sacrifice at the same level even though not everyone could give at the same level.

Look at the list of things that Moses asked for. There were high price items like gold, silver, and brass. But there were also things like yarn and goat hair, items that were accessible to the common Israelite.

Asset-based giving empowers us to sacrifice at the same level even if they can’t all give the same level. Share on X

The same dynamic is at work in a campaign setting. On the one hand, you have people that are making a sacrifice if they give 50 dollars. On the other, you’ve got people giving a half a million dollars (and that amount could be a rounding error on their balance sheet!).
Campaigns work when everyone sacrifices at a similar level as opposed to everyone giving at the same level.

The Final Analysis

In this ancient capital campaign, we see how Moses blew past the campaign goals — and not a single check was written. The first successful campaign ever was purely built upon asset-based giving.

You and your donors can still have this kind of success with asset-based giving by using the same principles they used back then.
For more information on reaching your capital campaign or asset-based fundraising goals, let’s talk! The call is free, and there’s no obligation.

The Cost of Doing Nothing: Embracing Technology in Fundraising

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Taking the ostrich approach to implementing technology into your nonprofit’s fundraising strategy won’t work for long. There’s a cost for those who choose to stick their heads in the sand.Technology has been a great addition to our lives. It heats our homes, gets us to work, and connects us with friends and family throughout the world.

No need to plan a meal for the picnic or gathering… a website automates the bring-a-dish tradition.

No need to call a friend… Uber can take us from point A to point B.

Every new technology from driverless cars to video drones to automated phone calls offers the possibility of improving your life — the benefits are fantastic! We can all gain from implementing automation and technology.

Shift Happens

However, we haven’t seen enough nonprofit organizations adapting to technology to assist them with their organizational goals. Today, nonprofit fundraising remains an old-school, face-to-face endeavor relying almost exclusively on human capital. And it works… for now.

Currently, potential donors prefer face-to-face engagement and personal touch — but the culture is shifting. Share on X

The loss of human capital and the shift to technology and automation is happening before our very eyes. As you look at technology trends, technology-based interactions are becoming a preferred mode of connection with people.

  • Most grocery stores have at least 3 self-checkout lanes. And Amazon’s home delivery model eliminates the checkout counter completely.
  • Banks have mobile apps and ATM machines to assist their customers rather than bank clerks.
  • At Lowe’s, you don’t need an associate to locate an item — just use their app. No human interaction required.
  • Face-to-Face, brick-and-mortar retail stores are financially struggling due to competition from Amazon and eCommerce marketplaces.

Now, there is something to say about organizations that choose to continue to do business as normal. Baby Boomers enjoy the relational connection — and their assets represent over $41 trillion.

Which means that nonprofit ministries and churches that ignore these massive shifts in technology should remain viable… for about 25 years or so more. But there’s a cost associated with doing nothing.

The Cost of Nothing

Organizations are reporting lower responses to direct mail and outbound calling. Many nonprofits depend on a large workforce to make sure they can develop donors directly.

Using people-power, instead of technology can consume a lot of your budget with low rates of return. Share on X

Despite recent efforts to dispel the idea of the noble, poor nonprofit, the fact remains that donors do not look highly on organizations with high overhead costs-especially when the technology exists to drive costs down.

No matter how much we hate the stigma, nonprofits that choose not to invest in cost-saving technology will face a real disadvantage.

Leveraging Tech

Seeing these trends, nonprofits must begin to leverage technological resources to begin connecting with the early adopters and the tech-savvy Generation X.

Addressing and pursuing changes within the organization now includes budgeting for software, branding, organizational structure changes, etc.

Find the balance between face-to-face fundraising and technology connected fundraising. Share on X

Putting money into developing your organization due to these trends is being a good steward over what God has given you. Take a look at what some of these inspiring ministries are doing to implement new technologies into their fundraising strategies:

  • North Point Community Church has an array of technology options for donors to choose from, including a mobile app and giving online.
  • Biola University cut their planned giving costs by 80% while increasing expected gifts more than five-fold when they implemented My Legacy Planner.
  • Center for Global Impact, an evangelistic ministry, launched a peer to peer fundraising campaign centered around the NBA’s March Madness games using an online technology.

The cost of implementing technology into your fundraising efforts is within your reach — but it’s easy to get lost among all the options available.

We can help. With over 50 years of combined experience in fundraising, we’d be happy to speak with you about how technology can help drive your mission forward.
The call is free — and there’s no obligation. So let’s talk!