Understanding and Tapping Into Donor-Advised Funds

Money continues to flow into donor-advised funds at a record-setting pace. DAFs held more than $251 billion in 2023 and funneled nearly $55 billion to charities that year, according to a study by the National Philanthropic Trust.

These funds have been a mainstay of community foundations for generations, but in the past decade or so their popularity has exploded. That surge has been driven in large part by financial-services companies entering the field and spinning off charitable arms to manage them.

Individuals who open these accounts, which are invested and may continue to increase in value, can take a tax deduction the same year they make a contribution. But they can wait as long as they wish to direct the money to charity.

Critics say DAFs delay or prevent money from reaching charities that sorely need support. The funds also make it more difficult for fundraisers to build ties with donors.

Once a donor transfers money into a fund, the sponsoring organization becomes the legal owner and the legal donor. When a gift is made from the account, it can be difficult to determine who directed the donation. Some account holders choose to remain anonymous when making a gift, leaving nonprofits no way to thank them or develop a relationship with them.

To help you get a better handle on DAFs and include them in your fundraising, we’ve gathered tools and advice articles that explain how they work, how some groups are securing gifts from them, and how to connect with individuals who own these funds.

Editor’s note: Chronicle tool kits are updated on an ongoing basis as new advice becomes available.