Nonprofit fundraising continues to change as donors look for simpler, more strategic ways to support the causes they care about. One of the most important developments is the growth of the donor-advised fund, commonly called a DAF.
According to data summarized by the National Philanthropic Trust, the United States had approximately 3.6 million DAF accounts in 2024. Those accounts distributed approximately $64.9 billion in grants to charitable organizations during the year.
That means a significant amount of charitable money is already set aside. The challenge for nonprofits is making sure donors know where to direct it.
For organizations exploring how to raise money for a nonprofit, DAF education should be part of the fundraising and marketing strategy.
What Is a Donor-Advised Fund?
A donor-advised fund is a charitable giving account sponsored by a public charity. Major sponsors include:
- Fidelity Charitable
- Schwab Charitable
- Vanguard Charitable
- National Philanthropic Trust
- Community foundations
- Religious organizations and university-affiliated foundations
A DAF works much like a charitable checking or investment account.
The donor contributes money or assets to the fund. The contribution is generally eligible for an immediate charitable tax deduction. The assets may then be invested and grow tax-free inside the account. At a later time, the donor recommends grants to eligible nonprofit organizations.
The donor does not legally own the money after contributing it. The sponsoring charity retains legal control, while the donor keeps the ability to recommend which qualified charities receive grants.
A simple example looks like this:
- A donor contributes $10,000 in cash or appreciated stock to a DAF.
- The donor may receive a charitable tax deduction for that contribution in the same tax year.
- The money remains available in the charitable account.
- The donor recommends a $2,000 grant to a local nonprofit.
- The DAF sponsor reviews and sends the grant to the nonprofit.
The money has already been committed to charitable purposes. It simply needs to be directed.
Why Donors Use DAFs
DAFs have become popular because they simplify charitable giving while offering flexibility. Donors may use them for several reasons.
An immediate tax deduction
A donor generally receives the tax deduction when contributing to the DAF, not when recommending a grant to a nonprofit later. This can help donors plan their giving around a particular tax year.
Donors should consult a tax professional regarding their personal circumstances and applicable deduction limits.
Giving appreciated stock
Donors may contribute appreciated securities, including publicly traded stock or mutual funds, when accepted by the DAF sponsor. In many cases, donating appreciated assets directly can help the donor avoid capital gains tax that might apply if the asset were sold first.
This is particularly important for donors who own stock that has increased substantially in value.
Many smaller nonprofits do not have the systems or brokerage relationships needed to accept stock directly. A DAF can provide donors with a simpler alternative.
Bunching several years of giving
Some donors “bunch” multiple years of charitable contributions into one high-income year. They may contribute a larger amount to a DAF, claim the charitable deduction when it is most useful, and then recommend grants to nonprofits over several years.
The donor can maintain consistent support for favorite organizations without making a large contribution every year.
Less paperwork
Instead of keeping records for every individual charitable gift, donors can organize their giving through one account. The DAF sponsor provides account records, while the donor recommends grants through an online portal or other established process.
Anonymous giving
DAFs generally allow donors to choose whether their names are shared with the nonprofit. Some donors prefer recognition, while others want to give privately.
A nonprofit should respect anonymous gifts while also making it easy for identified donors to receive appropriate thanks.
Family and legacy giving
Many donors use DAFs to teach children and grandchildren about generosity. A family may discuss which causes to support, recommend grants together, and establish a long-term charitable tradition.
DAF sponsors may also offer succession planning. A donor may name individuals, charities, or other eligible beneficiaries to continue recommending grants after the donor’s death.
Why This Matters to Your Nonprofit
A DAF grant can be one of the most efficient forms of support for a nonprofit.
In most cases, the organization does not need to complete a grant application, submit a detailed proposal, or provide ongoing reporting to the DAF sponsor. The sponsor typically handles its own eligibility review and sends the grant after the donor makes a recommendation.
DAF gifts can also be:
- Large compared with a typical individual donation
- Repeated over multiple years
- Unrestricted or directed toward a stated charitable purpose
- Sent electronically or by check
- Recommended by donors who are already committed to charitable giving
The important point is that DAF donors are not cold prospects. They have already placed money into a charitable account. They may simply need a reminder that a local organization is eligible to receive a grant.
This makes DAF outreach a practical component of nonprofit marketing ideas, donor stewardship, and year-end fundraising.
Why Your Donors May Already Have a DAF
A donor may have a DAF because the account fits the person’s financial, charitable, or family planning goals.
Common reasons include:
- The donor is tax-conscious.
- The donor works with a financial advisor.
- The donor sold a business or received a substantial amount of appreciated stock.
- The donor wanted to simplify charitable recordkeeping.
- The donor created a giving account during a high-income year.
- The donor inherited or joined a family charitable account.
- The donor wanted to involve family members in charitable decisions.
Some donors also forget to use their DAF accounts. The balance may sit for months or years because the account holder has not been reminded about a specific organization or need.
The funds are not waiting for a traditional fundraising appeal. They are waiting for a recommendation.
The Catch: The Donor Must Make the Request
A nonprofit cannot generally contact Fidelity Charitable, Schwab Charitable, Vanguard Charitable, or another sponsor and ask the sponsor to send a grant.
The donor or authorized DAF advisor must recommend the grant.
That distinction changes the fundraising approach. The organization should ask the donor, not the fund.
A simple question is:
“Do you have a donor-advised fund?”
This is now a normal fundraising question. If the answer is yes, the next conversation can focus on the organization’s mission, current needs, and the specific work a grant would support.
The nonprofit should not assume that every DAF grant is unrestricted. A donor may recommend general operating support, a specific program, a memorial gift, or another charitable purpose. The organization should clarify the donor’s intent and confirm that the proposed use fits its policies.
Practical Steps for Becoming DAF-Ready
1. Check your organization’s information
Make sure the nonprofit’s legal name, mailing address, and EIN are accurate in the databases used by DAF sponsors.
A donor who cannot find the organization may abandon the grant recommendation or select the wrong organization.
The organization should review its listings periodically and contact each sponsor when information needs to be corrected.
2. Add a DAF page to the website
Create a simple webpage that explains:
- What a donor-advised fund is
- That the organization can receive DAF grants
- The organization’s exact legal name
- The organization’s EIN
- How donors can search for the organization through their DAF sponsor
- What a grant could accomplish
- Whom donors can contact with questions
The page does not need to be complicated. Clear instructions are more valuable than technical language.
3. Add DAF language to donation materials
Include a short DAF message on:
- The donation page
- Year-end appeals
- Email newsletters
- Direct-mail letters
- Major-donor communications
- Planned-giving materials
- Annual reports
A useful message might say:
“If you have a donor-advised fund, you can recommend a grant to support our work. Search for our organization using our legal name and EIN, or contact our office for assistance.”
4. Ask by mid-November
DAF grants may take two to four weeks to arrive after the donor submits the recommendation. Processing times can be longer near the end of December.
For year-end fundraising, organizations should begin DAF outreach by mid-November rather than waiting until the final days of the year.
This gives donors time to locate the organization, submit the recommendation, correct any information, and allow the sponsor to process the grant.
5. Tell donors what their grant will fund
Donors respond better when they can connect their gift to a clear result.
Instead of saying that a DAF grant will “support the mission,” explain what the money can do:
- $500 can provide meals for local families.
- $1,000 can support a youth program.
- $2,500 can help fund a community event.
- $5,000 can provide equipment or expand a critical service.
Specific examples help donors make decisions and give staff useful language for conversations.
6. Learn the basic process
Fundraising staff and board members should understand the difference between:
- A direct charitable donation
- A DAF grant
- A private foundation grant
- A stock donation
- A planned gift
They should also know how to thank a donor when the grant comes from a sponsoring organization. If the donor’s name is included, the nonprofit should acknowledge the donor appropriately. If the grant is anonymous, the organization should thank the sponsoring organization without trying to identify the donor.
Organizations seeking broader fundraising guidance can also review available fundraising, marketing, and networking services.
Use DAFs as Part of Legacy Giving
A donor-advised fund can support a donor’s charitable legacy beyond annual giving.
Donors may be able to name a nonprofit as a beneficiary, name the DAF sponsor as a beneficiary, or establish a succession plan that continues charitable recommendations after their lifetime. The available options vary by sponsor.
A nonprofit can introduce the topic without pressure:
“If charitable giving is part of your long-term plans, your DAF may be one way to continue supporting this organization in the future.”
This conversation should be handled with care and should not replace professional estate-planning advice.
DAFs Are an Opportunity to Ask More Clearly
DAFs do not eliminate the need for relationships, communication, or gratitude. They make those qualities even more important.
The donor still decides which organizations receive support. The nonprofit must still explain its mission, demonstrate responsible stewardship, and show how a grant will help the community.
The most effective next steps are straightforward:
- Confirm that the organization is listed correctly with DAF sponsors.
- Publish a clear DAF page.
- Add DAF language to fundraising materials.
- Ask donors whether they have a DAF.
- Share specific funding opportunities.
- Begin year-end outreach by mid-November.
- Thank donors and sponsoring organizations properly.
- Discuss legacy options when appropriate.
For donors, a DAF is a flexible charitable account. For nonprofits, it is a funding channel that deserves a place in the fundraising plan.
DAF rules, tax treatment, processing times, and beneficiary options vary by sponsor and individual circumstances. Donors should consult a qualified tax professional or their DAF sponsor for specific advice.
If you are interested in learning more, contact us.
