Research from donor-advised fund sponsors, charitable research organizations, and industry reports points to a meaningful shift in donor behavior: people who begin giving through a donor-advised fund, or DAF, often give substantially more than they did before.
One widely cited industry analysis found that donors increased their annual giving to the same nonprofit by approximately 96% after switching to DAF giving. That figure does not mean every donor will suddenly double a contribution. It also does not mean that a DAF creates generosity where none existed.
The more accurate explanation is simpler:
A DAF removes many of the barriers that were limiting a donor’s generosity.
For small local nonprofits, this creates an important fundraising opportunity. The donors who already support an organization may have additional charitable funds available. The organization’s job is to make sure those donors remember it when they recommend grants from their accounts.
What Is a Donor-Advised Fund?
A donor-advised fund is a charitable giving account established through a sponsoring organization. The donor contributes cash, investments, or other eligible assets to the account. The donor generally receives the potential tax benefit when the contribution is made and can later recommend grants to qualified charities.
The donor does not personally own the charitable funds after contributing them. The sponsoring organization controls the account and reviews grant recommendations. However, the donor usually decides which eligible nonprofits should receive grants.
A DAF functions somewhat like a charitable budget:
- The donor contributes money or assets to the account.
- The funds are set aside for charitable purposes.
- The donor recommends grants over time.
- The sponsoring organization sends approved grants to nonprofits.
DAFs are offered through community foundations, financial institutions, and independent charitable organizations. Readers should review current reports from DAF sponsors and industry research organizations because account rules, processing times, and reporting practices can differ.
Research from the DAF Research Collaborative and related industry sources provides additional information about DAF participation, grantmaking, and donor behavior.
What Does the 96% Increase Actually Mean?
The 96% figure describes a change in giving behavior among donors who began using a DAF and then continued supporting a nonprofit through that account.
It should be understood in context:
- It represents an average increase, not a guarantee.
- It applies to donors who switched to DAF giving, not every charitable donor.
- It reflects giving to nonprofits included in the research.
- It may include donors who were already more engaged or financially capable.
- It shows an association between DAF use and increased giving, rather than proving that the account alone caused every increase.
Even with those qualifications, the finding is important. DAF donors frequently give larger amounts, give more consistently, and remain connected to organizations over time.
The DAF itself does not make a donor generous. Instead, it changes the process of giving. Once charitable money has been placed in the account, recommending a grant can feel less like taking money from a household budget and more like using funds that have already been designated for charity.
That change in mindset can have a significant effect.
Why Giving Often Increases After a Donor Opens a DAF
1. The tax benefit is addressed when the contribution is made
Many donors contribute to a DAF during a year when their income, business proceeds, or investment gains are higher. The contribution may help them plan their charitable giving and potential tax deductions for that year.
After the contribution is made, the donor can recommend grants to nonprofits over time. This arrangement allows the donor to separate the timing of the contribution from the timing of individual charitable gifts.
The result is often a larger charitable balance and a more organized giving plan.
2. Appreciated assets can make larger gifts more practical
Some donors contribute appreciated stock or other eligible assets instead of cash. Depending on the donor’s circumstances and applicable rules, contributing appreciated assets to a charitable account may allow the donor to avoid selling the asset first and potentially avoid recognizing capital gains on the appreciation.
That can make a larger charitable contribution feel more affordable than an equivalent cash gift.
A donor who would hesitate to write a large check may be more comfortable recommending a grant from assets already placed in a DAF. Donors should consult a tax professional or their DAF sponsor for specific guidance before contributing assets.
3. Donors can bunch several years of giving together
Some donors choose to combine multiple years of charitable contributions into one larger contribution during a high-income year. This practice is often called “bunching.”
The money may then be granted to different nonprofits over the following years. Because the funds are already committed to charity, the donor is more likely to continue thinking about charitable priorities and recommending grants.
Bunching can also create a more deliberate conversation among family members about which causes should receive support.
4. The money is already earmarked for charity
This is one of the most important behavioral changes.
When a donor recommends a $1,000 grant from a DAF, the donor is not deciding whether to remove $1,000 from a personal checking account. The charitable money has already been separated from personal spending.
The donor is deciding where the charitable budget should go.
That distinction lowers the emotional and practical barrier associated with each gift. It may also make larger grants easier to consider.
5. Online granting reduces friction
Most DAF sponsors provide online portals that allow donors to search for nonprofits and recommend grants. The donor can often manage multiple charitable relationships from one account.
This process may be faster than writing checks, visiting several donation pages, or gathering information for separate gifts. When a donor receives a year-end reminder, recommending several grants can be completed in one sitting.
The easier the process becomes, the more likely the donor is to follow through.
Why This Matters to Small Local Nonprofits
DAF donors are not necessarily strangers to an organization. They may already be among its most valuable supporters.
They can include:
- Larger annual donors
- Business owners
- Retirees
- Community foundation supporters
- People who work with financial advisors
- Families who have established a charitable giving tradition
- Donors who regularly support local causes
If those donors increase their charitable giving by approximately 96% after switching to DAF giving, the additional money will be directed somewhere. The nonprofit must be visible when the donor logs into a DAF portal and chooses organizations to support.
A DAF grant also typically arrives without a grant application, project proposal, or extensive reporting requirement. That does not eliminate the need for responsible stewardship. It simply means the organization can receive support through a relatively simple administrative process.
This is one reason DAF outreach belongs in a broader plan for how to raise money for a nonprofit.
DAF Donors Become Grant Recommenders
A donor who gives by check may think in terms of annual donations. A donor who uses a DAF often begins thinking in terms of grant recommendations.
That is a meaningful behavior shift.
The donor may have:
- A DAF balance
- A list of preferred charities
- A family giving plan
- A sponsoring organization’s year-end reminder
- A portal that makes grant recommendations convenient
Many donors review their charitable plans in November and December. If a nonprofit is not communicating with them at that time, the organization may be overlooked even when the donor values its work.
The goal is not to pressure donors. The goal is to make the organization easy to remember, easy to find, and easy to support.
Practical DAF Fundraising Steps for Your Nonprofit
Verify your legal information
Confirm that the organization’s legal name, mailing address, and Employer Identification Number are accurate in the databases used by DAF sponsors.
An incorrect name or EIN can make the organization difficult to locate. It can also delay a grant.
Publish a simple DAF page
Create a plain-language page explaining how donors can recommend a grant. Include:
- The organization’s legal name
- The organization’s EIN
- A short explanation of DAF giving
- General instructions for finding the organization through a DAF portal
- A contact method for questions
The page does not need to be complicated. Clarity is more useful than lengthy technical language.
Add DAF language to existing communications
DAF information should appear in places donors already visit, including:
- The donation page
- Year-end appeals
- Newsletters
- Annual reports
- Email acknowledgments
- Fundraising event materials
This is one of the most practical nonprofit marketing ideas available because it uses existing communication channels.
Ask directly
“Do you have a donor-advised fund?” is now a reasonable fundraising question.
Fundraising staff, board members, and volunteers can include the question in donor conversations. A donor may not realize that a DAF grant is an option unless someone explains it.
Give donors a specific purpose
Tell donors what a grant can accomplish. For example:
- “A $2,500 grant helps provide meals for local families.”
- “A $1,000 grant supports transportation for program participants.”
- “A $500 grant helps cover supplies for the next community event.”
Specific examples help donors connect the grant recommendation to a real result.
Start year-end outreach by mid-November
DAF grant processing can take two to four weeks, depending on the sponsoring organization and the donor’s instructions. A December 31 appeal may arrive too late for some donors.
Begin DAF reminders by mid-November. Encourage donors to check with their sponsor about submission deadlines and processing times.
Thank the right people
Thank the donor whenever the organization can identify the donor. In some cases, the sponsoring organization may also provide acknowledgment or reporting information.
The organization should not assume that a DAF grant replaces personal stewardship. A thoughtful thank-you remains essential. Showing donors what their support accomplished also creates a stronger foundation for future recommendations.
For additional guidance on donor gratitude, see The Power of a Thank-You: Why Gratitude Is Your Best Fundraising Tool.
Build Relationships With Donors, Not the Fund
There is one important limitation to understand.
After a donor contributes assets to a DAF, those charitable dollars are held by the sponsoring organization. The sponsor controls the account and decides whether a grant recommendation meets its requirements. Only the fund holder can recommend a grant.
A nonprofit cannot directly claim money from a DAF or treat the account as its own. The organization must build a relationship with the donor.
That relationship includes communication, gratitude, transparency, and consistent evidence of impact. The nonprofit should show donors how their support helps the community and make future giving decisions easy.
The sponsoring organization facilitates the transaction. The donor makes the recommendation. The nonprofit earns the next recommendation by continuing to demonstrate value.
Key Takeaways for Local Nonprofits
- DAF donors may increase their giving by approximately 96% after switching to DAF-based support.
- The figure reflects a documented change in donor behavior, not a guaranteed result for every organization.
- DAFs reduce friction by making charitable money available through a dedicated giving account.
- Appreciated assets and bunching can help donors create larger charitable balances.
- Many DAF donors are already among a nonprofit’s larger or more engaged supporters.
- Organizations should verify their legal name and EIN in DAF sponsor databases.
- A clear DAF page and simple instructions can remove unnecessary confusion.
- Year-end outreach should begin by mid-November because grant processing may take two to four weeks.
- Donors should be asked directly whether they have a donor-advised fund.
- Nonprofits should consult qualified professionals or DAF sponsors regarding specific tax, eligibility, and timing questions.
- Gratitude and continued communication remain essential after a DAF grant is received.
If you are interested in learning more, contact us.
