Keep up with everything happening in fundraising by signing up for our Philanthropy Today newsletter and joining our LinkedIn group for fundraisers.
Gifts from donor-advised funds accounted for nearly 10 percent of all giving to charity in 2022, according to Giving USA, an eye-popping $52 billion in total. A new day devoted to DAF giving is launching this October 10 to increase awareness about the accounts and encourage more donors to give from them.
“The goal is just to raise awareness of what DAFs are and why they’re helpful,” says Mitch Stein, head of strategy at Chariot, the DAF payment processor that is leading the DAF Day initiative. “Then to activate donors with a specific, dedicated day where people really feel like a part of something. Giving Tuesday has been able to do this, with lots of communities leveraging this giving day locally. So it just makes sense as a tool that can activate donors.”
Fundraisers have increasingly heard about the power of finding supporters who have donor-advised funds, because they can offer steady funding, even in challenging economic times. But for many, DAFs are still mysterious — and controversial.
Donors get an immediate tax deduction for putting money in their DAFs, but there are no requirements for how quickly it’s distributed to charity. Critics argue that by talking about DAFs as IRA-like accounts, sponsors inadvertently encourage donors to stockpile cash, rather than make grants to charities. Opponents have called for a range of reforms, including payout rules and disclosure requirements.
Yet despite those concerns, donor-advised funds continue to grow in size and influence. Ahead of the inaugural DAF Day, the Chronicle dug into the latest research and spoke to veteran fundraisers about the importance of DAF giving and their best advice on letting donors know that your charity accepts DAF gifts.
DAFs Are Growing, Research Says
Giving from DAFs has grown to become a much larger part of the giving ecosystem in recent years, according to both research reports like Giving USA and reports from commercial DAF sponsors.
“We have seen steady increases in the amount of money coming from DAFs, particularly following 2021, which was a banner year for giving to both foundations and to DAFs, with the grants coming from DAFs increasing as well,” says Jon Bergdoll, associate director of data partnerships at the Indiana University Lilly Family School of Philanthropy, which collects data for the Giving USA report.
Vanguard Charitable, a commercial DAF sponsor, had an up year according to Elaine Kenig, chief communications officer. In the 2024 fiscal year, which closed June 30, DAF donors at Vanguard gave more than $3 billion to charities, a 45 percent increase over the previous year.
Fidelity Charitable DAF holders doled out nearly $6.4 billion to charities in the first 6 months of 2024, a 30 percent increase compared to the same period last year, according to the company.
Daffy, a donor-advised fund sponsor that has many small-dollar donors who contribute $25 to $50 monthly to their DAFs, also had a higher-than-normal 2024 fiscal year. “We saw a huge increase on every metric,” says Adam Nash, Daffy CEO. Account holders contributed $105 million to their funds in 2023, an increase of 425 percent over the previous year.
“This idea that the donor-advised fund is an account that everyone should consider is getting more and more attention now,” Nash says.
Chariot released a report this summer that looked at 20 nonprofits’ experience with DAF giving and how it compared to other forms of giving at those organizations.
One trend the report found was that donors who had previously given through other methods — such as a credit card or check — and then began giving through their DAF gave 96 percent more. The report also found that DAF donors are already in many nonprofits’ files — with 26 percent of DAF donors having given through some other method before they started giving through their fund. The retention rate for DAF donors was also 15 percent higher than that of supporters who donated in other ways.
“Giving USA,” found that where donors set up their donor-advised fund affected how they doled out grants from it. For example, donors with DAFs housed at community foundations gave differently than those whose funds were housed at national commercial DAF sponsors, such as Fidelity or Vanguard. Giving to religious causes was higher at nationally sponsored DAFs, while giving to human services was higher at DAFs housed in community foundations.
“A few years ago, we actually looked at where grants from community foundations go — whether they stay in the states that that community foundation serves,” says Anna Pruitt, managing editor of “Giving USA.” “The majority of the grant dollars do stay in-state for community foundations. We did not run that analysis for this newest year, but I would anticipate that those trends are similar.”
How to Reach Out to DAF Donors
Charities that are trying to court DAF donors should remember that these donors run the gamut, says Stein, at Chariot.
“People assume that DAF donors are just these ultra-wealthy, ultra-rich donors,” he says. “They come in lots of shapes and sizes. More and more, there’s increased access and democratization of the use of DAFs. So, when we looked at the average and median size of a DAF gift, excluding the $25K and up gifts, the average gift was around $1,000, and the median most recently was around $300.”
Susan G. Komen, the breast-cancer research organization, makes information about DAFs available on its website and on any donation pages, says Trish Davis, vice president of major and planned giving. While the organization doesn’t do specific DAF-related drives at events like their walks, they often talk with supporters about these giving vehicles.
“We continue to have conversations about if they have DAFs and letting them know they can use them,” Davis says. “We include information on our website, in mailings, letting them know if they have a DAF, we accept it.”
She notes that DAFs aren’t just vehicles for their major donors, but donors at all giving levels. Josh VanDavier, associate director for membership at the Trust for Public Land has had a similar experience. “We see a good number of donors who are in the $250 to $500 range,” he says, noting that his DAF donors often make repeat gifts the following year.
Both Davis and VanDavier say it’s important to mention DAFs at every opportunity and include them as an option in any giving campaign, including year-end and GivingTuesday. If donors are making bigger gifts, that can be an opportunity to talk to them about what type of giving they want to do in the future, such as larger gifts or planned giving, says Davis at Susan G. Komen.
Pruitt, with Giving USA, added that data they get shows some folks are also thinking of planned giving with their DAFs. “Especially at community foundations, we see a lot of endowed donor-advised funds,” she says. Endowed DAFs limit the payout and are designed to last beyond the lifetime of the original owner.
While some donors have grand plans, it’s important to remember that many just want to do their small part for charity in a consistent way, says Daffy’s Nash.
“If you’re the type of person who gives away $600 a year to charity, you mostly want to put aside $600 a year and then give $600 a year,” he says. “We see this pattern more and more of people really wanting to fund philanthropy on an ongoing basis.”
City Harvest, a food-rescue group, has received DAF donations for many years, says Dori Paulino, director of direct response. The organization noticed DAF donors give more — the organization’s average DAF donation is around $1,900, while the average direct-response gift is $300 — and wants to lean into courting more of those donors.
“We want to make sure to renew current DAF donors, but also educate more donors they can give this way, remind them that it’s an option,” Paulino says. “Our goal is to be more intentional about the information that we put out there for our donors.”
This includes ensuring information is clearly visible on the website, but also including mention of DAFs in the annual board report and newsletters, too, Paulino says. “Just think of existing communications and existing opportunities where you can insert some of that language.”
