Donor-Advised Funds Explained: The Basics Every Fundraiser Needs to Know
Learn how to identify, attract, and steward your share of the $326 billion donor-advised fund market
Let’s turn to Donor Advised Funds, or DAFs, this week. They’re not new, but how do you attract more DAF gifts?
Picture this: you open a generous grant check from Fidelity Charitable or a local community foundation, but you are left scratching your head about who really made the gift.
If you’ve been in fundraising for more than a few years, this scenario is probably all too familiar: a mystery person made a significant gift through a donor-advised fund (DAF). How do you thank them, and how do you build a relationship with them?
Mossy Oaks in spring in the Cotswolds in England © Tonya Hennessey
Why DAFs are a Priority
If you don’t yet have a clear picture of exactly how DAFs work and what they mean for your donor relationships, it’s time to develop one.
The numbers make this an urgent priority for any nonprofit professional. According to the National Philanthropic Trust’s 2024 DAF Report, there are now over $326 billion in assets held in donor-advised funds, which is up 30% from the prior year.
Furthermore, DAF giftmaking to nonprofits reached a staggering $54 billion in 2024. This represents one of the primary channels through which significant philanthropic capital now flows, and you want to ensure your organization is ready to receive these gifts.
What a DAF Fundamentally Is
A donor-advised fund is a personal charitable giving account held at a sponsoring organization. This sponsor is typically a community foundation or the charitable arm of a financial institution, such as Schwab Charitable, Fidelity Charitable, or Vanguard Charitable.
The donor contributes assets, takes an immediate charitable tax deduction, and then recommends grants to specific nonprofits over time at their own pace.
As Candid Learning notes, this differs from private foundations, which must make qualifying charitable distributions each year equal to roughly 5% of the average value of their non‑charitable‑use (investment) assets.
Donors love these funds because the tax deduction is immediate and applies to the full fair market value of the contribution, even if the resulting grants are distributed over several years.
For instance, a donor who sells a business or receives a large bonus can contribute to their DAF in a high-income year, take the full deduction, and then thoughtfully give to their favorite nonprofits over the next decade. It is a strategic planning tool for donors just as much as a convenient giving vehicle.
What This Means for Your Organization
DAF gifts typically arrive with the sponsoring organization’s name on the check rather than the donor’s name. This creates a specific cultivation challenge since you might not initially know who provided the funds.
When a DAF gift arrives, always check first whether any identifying information is included, as many platforms now allow donors to attach their name to the grant recommendation.
If their information is there, reach out personally to begin or deepen the relationship. If it’s not included, then promptly acknowledge the gift to the sponsoring organization and flag the transaction in your CRM for potential future identification.
How to Signal That You Are DAF-Ready
Many nonprofits are perfectly equipped to receive DAF grants but simply have not told their donors. This is a massive missed opportunity.
Research shows that DAF donors give an average of 4.2 times per year compared to 2.8 times for traditional donors, often at higher amounts and with much greater consistency.
If a donor who already loves your organization does not know you accept DAF grants seamlessly, they might not think to use that vehicle to support your mission.
Here are a few simple, highly effective ways to signal your DAF readiness to your community:
· Update your donate page: Add a clear line stating, “We gladly accept gifts from donor-advised funds. To give through your DAF, please use our legal name and EIN: [Organization Name], EIN [XX-XXXXXXX].”
· Include it in your outreach: Mention it in your year-end appeals and major gift conversations by asking, “Do you give through a donor-advised fund? We would be honored to be included in your annual distributions.”
The Relationship Is With the Donor, Not the Sponsor
Keep in mind that the sponsoring organization is merely a financial vehicle. The true relationship is with the person who opened the DAF.
This is the connection that determines whether your organization continues to receive grants year after year, whether those gifts grow, and whether a donor eventually includes you in their estate plan.
Be sure to steward DAF donors exactly as you would any major donor by providing personal thank-yous, detailed impact updates, and exciting invitations to deepen engagement.
The fact that their gift came through a major financial institution does not change the core nature of the personal relationship you are building.
These are the basics. We’ll be covering DAFs in more detail in upcoming Premium issues, so keep an eye out for them.