According to the National Philanthropic Trust (2020), Donor -Advised Funds (DAFs) represent a significant and growing pool of capital, now totaling $141 billion, a 16.2% increase from the previous year, that is earmarked for charitable purposes. However, approximately 80% of DAF assets (or over $100 billion) are invested passively, largely in public securities that do not directly contribute to charitable purposes.

The CMF Impact Investing Committee is partnering with Social Finance, a mission-driven, impact investing and advisory nonprofit that leverages DAF capital for outcomes-oriented, impact-first investments to host an event this week open to all CMF members to discuss how Michigan DAF sponsors can unlock capital, galvanize donors and accelerate equitable recovery across their communities.

Social Finance shared with CMF toplines from their recent research launched to better understand the demand for impact-first investments among DAF holders in the U.S. 

Their findings showed that more than 70% of DAF holders have a strong interest in making impact-first investments through their funds. DAF holders also expressed a willingness to allocate up to 20% of their DAF balance to impact-first investments to augment traditional grantmaking. 

As a result of this research, Social Finance partnered with the Silicon Valley Community Foundation and Jewish Community Federation and Endowment Fund to curate place-based, impact-first investment opportunities that allow donors to invest their DAF assets to equitably support low-income communities.

These efforts were recently highlighted by Inside Philanthropy.

“There has never been a more urgent need to reimagine the role that DAFs can play in supporting more equitable access to capital,” Tracy Palandjian, CEO and co-founder of Social Finance, and Danny Grossman, CEO of the Federation said in the article. “As we work to build back better, DAF sponsors and donors must work together to ensure that more DAF capital flows to where it is needed most in this moment to enable entrepreneurs, families, and communities of color to overcome pervasive economic displacement.” 

Jennifer Oertel, CMF’s Impact Investing Expert-in-Residence, shared more about DAFs and impact-first investments.

“DAFs present a unique opportunity for impact investing,” Oertel said. “The very nature of DAFs, where the assets of individual accounts are held as part of the foundation’s assets, present a wonderful opportunity to pool capital and intentionally invest it to create positive social impact – especially in the community served by the community foundation.” 

Oertel encourages DAF-holding foundations to consider that in addition to the good they create in their communities through grantmaking, they could catalyze those efforts further with their investment dollars.

You can learn more about Social Finance’s lessons learned during our event Mobilizing Donor-Advised Funds Toward Impact-First Investments taking place this Wednesday, May 26.

Want more?

Explore CMF peers’ work in this space through our video series Impact Investing: Members in Action.

Connect with CMF’s Impact Investing Expert-in-Residence, Jennifer Oertel, to learn more.