What you need to know right now about donor-advised fund giving 

The first-ever DAF Day is coming up on October 10. Do you know how to tap into donor-advised fund (DAF) giving, an increasingly popular way to give, including among younger donors? Here’s what you need to know about the way DAFs work, the benefits and challenges to donors and recipients, and how nonprofits can take advantage of their growth.  

The basics: What is a donor-advised fund? How do they work? 

A DAF is a charitable fund set up by the donor to be managed by an investor at a community foundation or investment firm. These articles outline the benefits and mechanics of giving through a DAF and how nonprofits can get on a DAF donor’s radar. 

The ABCs of DAFs: What is a donor-advised fund? The first of this two-part introduction explains the benefits of giving through a DAF instead of starting a foundation or donating directly to charities. A DAF enables donors to give to the causes and charities they support “without putting in a lot of work”—while receiving up-front tax deductions. 

The ABCs of DAFs: How to tap into donor-advised funds. Given that most DAFs aren’t set up to receive grant proposals, how can nonprofits make sure DAF donors and managers can find them? Suggestions include keeping your Candid nonprofit profiles updated and making a broad appeal to existing supporters, many of whom may have DAF accounts. 

The trends: What does the data say about donor-advised fund giving? 

According to recent research, DAFs are the fastest-growing giving method in the United States, with annual grantmaking increasing 600% over the last decade to $52.2 billion in 2022. The articles below explore data on the growth in DAF giving. 

5 takeaways from the 2024 DAF Fundraising Report. Based on 2019-23 data, this report found that nonprofit revenue from DAF gifts grew significantly faster than non-DAF revenue. Read about how growth in the number of DAF donors, average gift size, and retention rates all outpaced those of non-DAF donors and how existing supporters gave even more when they switched to DAF giving. 

Community foundations: Donor-advised fund grants outpaced contributions in 2022. Many community foundations sponsor DAFs, and this year’s CF Insights survey from the Council on Foundations shows DAFs have become a significant part of their portfolios. Dig into data also showing how, despite lower investment returns in 2022, total DAF grant dollars increased significantly. 

The implications: What does the growth of DAF giving mean for the sector? 

DAFs also come with challenges, however. Some note that, while convenient for donors, DAFs can mean delays in giving, lack of transparency, and limited access for nonprofits. These articles examine some of the arguments for and against DAFs. 

Donor-advised funds: What DAFs’ popularity may mean for philanthropy. This overview highlights how the benefits to donors that make them popular create challenges for charities. For example, “unless the DAF owner or the nonprofit recipient makes the source of the gift known, DAF gifts land in something of a black box.” This can hinder grantseekers’ ability to engage with DAF donors. 

What the donor-advised fund payout rate means for philanthropy and how it fits into the bigger charitable giving picture. One criticism of DAFs is that, unlike foundations there’s no annual payout requirement, so donors sit on their money. This article explores ways of calculating DAF payout rates, including Candid’s—and, perhaps to the surprise of some, finds that DAF payout rates are typically higher than those of foundations. 

Private foundations and DAFs: Short-lived synergy?. How might philanthropists combine the advantages of a private foundation and a DAF? This article weighs the benefits and limitations of both options and suggests that using both offers sustainable financial benefits—to the donor. 

The strategy: How to increase and engage DAF donors 

The benefits of DAFs for donors are clear. The question is: How can nonprofits maximize DAF revenue? Find out how fundraisers can expand their DAF donor base and encourage them to give more. 

How to better engage with donors who give through donor-advised funds. Here are some tips from a DAF sponsor for connecting with DAF managers: Reach out to the account holder directly, show you’re DAF-friendly, suggest that donors use DAFs to convert complex assets into charitable dollars, and educate your fundraising team about DAFs. 

Don’t be afraid to tap into donor-advised funds (DAFs). Despite all the attention on DAF giving in recent years, there’s room for greater awareness, both among donors and charities. Get tips on how charities can prepare for DAF Day—a “giving day” launched by nonprofits, fundraising platforms, and DAF sponsors to boost DAF giving—and make the most of the opportunity. 

Want to learn more about how to become a DAF donor, pick organizations to support, and rally your network to do the same? Register for Chariot’s September 26 webinar DAF Day for Donors: Show Your Network Why You DAF, which will include Tracy Waksler, vice president of growth at Candid.