Donor-Advised Fund

A donor-advised fund (DAF) is a philanthropic vehicle administered by a sponsoring organization — typically a community foundation or financial institution — that allows donors to make charitable contributions, receive an immediate tax deduction, and then recommend grants to 501(c)(3) nonprofits over time. DAFs hold over $230 billion in assets nationally and are one of the fastest-growing giving vehicles in American philanthropy.

How DAFs Work

1. Contribution: A donor contributes cash, securities, or other assets to a DAF account at a sponsoring organization (Fidelity Charitable, Schwab Charitable, Vanguard Charitable, a community foundation, etc.).
2. Tax deduction: The donor receives an immediate tax deduction in the year of the contribution — even if the money is not granted to a nonprofit until later.
3. Investment: The funds are invested and can grow tax-free within the DAF account.
4. Grant recommendation: The donor recommends grants to specific nonprofits over time. The sponsoring organization processes the grant (after verifying the recipient's 501(c)(3) status).

The key word is "recommend" — legally, the sponsoring organization controls the funds, but in practice, grant recommendations are approved over 99% of the time.

Why It Matters for Fundraising

DAFs represent a massive and growing source of charitable revenue that many nonprofits underutilize:

• DAF grants totaled over $52 billion in 2024, making DAFs one of the largest sources of charitable distributions in the US.
• Average DAF grant sizes tend to be larger than typical individual donations. Donors who use DAFs are generally affluent and intentional about their giving.
• The timing disconnect creates opportunity. Donors contribute to their DAF for the tax deduction (often in December), but may not recommend grants for months or even years. This means there are billions of dollars sitting in DAFs waiting to be directed. If you ask, you may receive.
• DAF donors are often "hidden" in your database. DAF grants arrive as checks or transfers from the sponsoring organization (e.g., "Fidelity Charitable"), not from the individual donor. This makes donor identification and stewardship challenging unless you actively track DAF gifts and connect them to the recommending donor.

What Nonprofits Should Do

Accept DAF gifts on your donation page

Include a DAF option on your online giving form. Some fundraising platforms integrate with DAF networks (like DAF Direct by Chariot) to let donors search for their fund and initiate a grant directly from your donation page. This reduces friction and captures gifts you might otherwise miss.

Ask your donors

A simple message in your year-end campaign or major gift communications — "Do you have a donor-advised fund? You can recommend a grant to us through your DAF provider" — prompts action from donors who might not think to use their DAF for your organization.

Acknowledge promptly

DAF grants are irrevocable once the sponsoring organization approves them. Acknowledge the gift quickly, thank both the sponsoring organization and (if identified) the individual donor, and treat the donor relationship with the same care you would give a direct major gift.

Track and steward DAF donors

Build a process for identifying the person behind the DAF grant. When the grant arrives from "Schwab Charitable" with a donor name attached, add that donor to your CRM, connect the DAF gift to their profile, and steward them just as you would a direct donor. DAF donors who feel connected to your organization will recommend more grants over time.

Educate your board and staff

Many nonprofit staff and board members do not fully understand DAFs. A 15-minute training session on what DAFs are, how grants work, and how to encourage DAF giving can unlock significant revenue.

Common Misconceptions

• "DAFs compete with direct giving." Research shows DAF holders give more to charity overall, not less. The DAF is an additional vehicle, not a replacement for direct donations.
• "We can't steward DAF donors." Most DAF grants include the donor's name. Build a process for connecting grants to donor profiles. For anonymous grants, send a thank-you to the sponsoring organization.
• "DAFs are only for wealthy donors." While the average DAF account is large, many sponsoring organizations have minimums as low as $0-$5,000 to open an account. DAFs are increasingly popular among middle-income donors who want structured giving.

Related Terms

• Community Foundation
• Planned Giving
• Charitable Contribution
• Wealth Screening
• Year-End Giving

GiveLink supports DAF-friendly donation pages and helps you track DAF grants in your donor CRM, connecting sponsoring organization gifts to individual donor profiles for seamless stewardship.