DAFs Are Reshaping Philanthropy. Here’s How Nonprofits Can Stay Ahead.
The fundraising landscape has never been static but one recent shift has been impossible to ignore: the explosive growth of donor-advised funds (DAFs). These used to be niche vehicles reserved for high-net-worth individuals and family foundations and have gone mainstream. With billions in charitable assets sitting in DAFs across the country, it’s fair to ask: are DAFs a fleeting trend, or are they the next pillar of fundraising strategy?
Let’s dig into what DAFs are, why they’re growing, and what this all means for nonprofits trying to keep up.
A Refresher: What Is a Donor-Advised Fund?
At its core, a DAF is a charitable giving account that allows a donor to contribute, receive an immediate tax deduction, and then recommend grants to nonprofit organizations over time. The key word here is recommend. The sponsoring organization, usually a public charity, community foundation, or a financial firm’s philanthropic arm, technically controls the funds and approves grants, although in practice, most follow the donor’s guidance.
Unlike private foundations, DAFs offer donors a low-barrier, flexible, and often anonymous way to give without the overhead. And the money can sit there, growing tax-free, until the donor decides where to direct it.
The Rise of DAFs: What the Numbers Show
According to the 2024 Donor-Advised Fund Report from the National Philanthropic Trust, DAFs held $251.5 billion in charitable assets in 2023. That’s a 9.9% increase from the previous year despite a 21.7% drop in new contributions. Grantmaking from DAFs remained strong at $54.77 billion, which is slightly down from 2022.
While the year-over-year drop in contributions may raise eyebrows, the long-term trend is clear. DAFs are becoming one of the most reliable, and largest, sources of charitable dollars.
Tax efficiency: Donors get an immediate tax deduction when contributing to a DAF, even if the funds aren’t granted until later.
Investment potential: Funds can grow over time through investment, increasing the eventual grant amount.
Flexibility: Donors can support causes on their own timeline rather than rush to give at the end of the calendar year.
Privacy: DAFs allow anonymous giving, a draw for those who prefer to keep their philanthropy low-key.
The Pros (and Promises) for Nonprofits
If you're a fundraiser, DAFs represent real opportunity. These are committed donors who have already set aside money exclusively for charitable use. They’re not deciding whether to give—only where to give.
DAF donors also tend to be more intentional. Research shows they’re more loyal and often give more over time. Many involve their families in the decision-making process, which can lay the foundation for multigenerational support.
DAFs can also be a stabilizing force. While individual giving overall declined last year, DAF grantmaking remained steady, even during market volatility. That kind of consistency is critical for organizations trying to budget for the long haul.
The Cons (and Complications)
DAFs aren’t without their drawbacks. The most common complaint? Delayed disbursement. Money can sit in DAFs indefinitely. Unlike private foundations, which must distribute at least 5% annually, there’s no legal requirement for annual payouts. While some donors are highly engaged, others aren’t.
That can lead to a frustrating dynamic. Billions of dollars are earmarked for charity but aren’t at work yet in communities.
There’s also a lack of transparency. DAFs often don’t reveal donor identities, which makes it hard to thank, steward, or build long-term relationships. Some nonprofits receive grants from anonymous DAFs and never know who to attribute them to—or how to inspire a repeat gift.
The “How” of DAF Fundraising
What can fundraisers do? First, acknowledge the reality that DAFs are not an emerging trend. They’re already central to the giving ecosystem. And that means it’s time to adapt your fundraising strategies accordingly:
Ask about DAFs in donor surveys: You may already have DAF donors in your database and not even know it.
Mention DAFs in appeals and acknowledgments: Even a line like “Did you know you can support us through your DAF?” can spark action.
Make it easy: Provide clear instructions for giving via DAFs on your website and in email footers.
Build relationships with DAF sponsors: Community foundations, financial advisors, and philanthropic consultants are gatekeepers and guides to DAF donors.
Treat DAF donors like major donors: Because they often are or could become one.
Trends to Watch
Several developments suggest DAFs will only become more central to fundraising:
DAF donors are getting younger: Millennials and Gen Z donors are opening DAFs earlier, drawn by ease of use, digital access, and impact tracking.
Workplace giving is evolving: Companies like OpenAI and Fidelity are offering DAFs as employee benefits, often paired with matching funds.
DAFs are expanding into new sectors: From wedding registries to impact investing, DAFs are being used in increasingly creative ways.
Regulation is coming: Proposed IRS rules may bring more clarity, or complexity, to the DAF space. Either way, staying informed is key.
The Bottom Line
So, are DAFs the future of fundraising? They’re certainly a big part of its present.
Yes, there are valid concerns about payout rates, transparency, and donor control. But for nonprofits that can tap into this funding stream with intention and savvy, DAFs represent a huge opportunity. These funds are already committed to charitable purposes. Your job is to make sure your mission rises to the top of the list.
DAFs may not replace traditional fundraising, but they’re no longer an “alternative” either. They’re an increasingly core channel. The question isn’t whether to pursue them. The question is how to pursue them.
If your nonprofit doesn’t have a DAF strategy, it’s time to get one. Because the donors are out there. The funds are available. And the future is already arriving.