Giving Compass' Take:

• Nicholas Salter shares strategies for increasing the flow of Donor Advised Fund capital to impact investments to increase the impact achieved by this philanthropic vehicle. 

• Why isn't impact investing the standard investment form for DAFs? How can funders help shift the norms around DAFs? 

• Learn more about Donor Advised Funds and impact investing. 

There continues to be growing interest in better connecting Donor Advised Funds (DAFs) with deep, impact investing opportunities. While we have some promising examples, few are talking about the changes that could really build this market. More shared data, more donor awareness, and practical tweaks to way DAFs engage with their donors could all boost the flow of DAF capital to impact investments.

Here are five specific ideas to build the market and boost the flow of DAF capital to impact investments:

1. More shared data. The impact investing sector has worked collaboratively to survey, share, and analyze data and produce valuable research to grow the market. That same approach could produce some useful insights in the DAF space.

2. Advisor education. How many DAF sponsors have raised their hand to own the responsibility of educating mainstream donors and advisors? That’s a useful place for more leadership, and an exciting a place where community foundations can lead. Community foundations often offer more advanced donor services and have closer relationships with their DAF donors.

3. Donor onboarding. The DAF onboarding process has been designed to be quick and easy. What if, during this onboarding, donors were introduced to a broader financial toolkit for social and environmental impact with new accessibility to impact investment?

4. A new default option. DAF sponsors could create a general investment pool with some mix of impact investments and make that the standard or default option for new DAF donors.

5. Outcomes Portfolios. One particularly exciting idea is an “outcome portfolio” that encourages donors to use a mix of grants and investments to achieve specific, measurable outcomes on an issue their donors care about.

Read the full article about increasing Donor Advised Fund capital flow to impact investments by Nicholas Salter at Progressive Philanthropy Group.