Although it may fall outside of the "grant savvy" library, the question has come up about the difference between a donor-directed and donor-advised fund AND how we, as grant seekers, can find opportunities with these funds.
A donor-advised fund is just that. A fund set up, usually with a community foundation, by a donor. The fund has a specific purpose or focus such as "at-risk youth", "homelessness" or "education"--something of importance to the donor.
The donor-advised fund is typically the easiest, most flexible avenue for creating a large giving entity. Donors to these funds provide suggestions on which causes their money should support.
In the case of a donor-directed (or donor-designated) fund it is set up similarly, but the donor is specific about which organizations or groups will receive funding.
How does this affect grant seekers?
It is important to know about and be involved with local community foundations that mange these donor funds. Good relationships go a long way when tapping these opportunities.
While donor-directed or advised funds are usually closed to applications and even note: "does not accept unsolicited proposals", it doesn't mean you shouldn't look for ways to inform the community foundation advisors about the work you do.
A great example of this happened last year with an organization that I was working with. The organization received a call from a trustee/financial advisor of a local community foundation. She had attended a roundtable discussion focused on the interests of her donor where one of the organization's program managers gave a presentation.
The financial advisor took what she learned about the program and shared it with her donor, who held a donor-advised fund with the community foundation. She recommended they make a gift to this valuable program. The donor agreed. A few weeks later, the organization received a substantial, unsolicited gift. They have been told that a gift will probably arrive in 2009 as well.
There isn't a formal method for seeking support from these types of funds, but it is possible. It is the job of the community foundation to match their donor's interests with an appropriate project, program and/or organization.
It is not a typical grant seeking method, but after some relationship building, it can evolve. Donor-advised funds may ask you to provide reports or "apply" annually to receive funding. Be prepared and don't let this opportunity slip past your radar. Patience is key.