Should you care about… donor-advised funds?

The what

For major donors, DAFs solve a critical problem: tax efficiency with giving flexibility. Donors get immediate tax deductions when funding their DAF, and can recommend grants over time while their funds grow tax-free.

For nonprofits, this creates a stewardship puzzle. DAF grants typically arrive from sponsoring organizations, such as Fidelity or Schwab Charitable, rather than directly from individual donors. That makes it harder to identify, acknowledge, and maintain donor relationships. When staff time is limited, nonprofits may assume it’s more efficient to focus on channels that provide easier paths to donor cultivation.

The why

Donor-advised funds showed 6% revenue growth and 15% larger grants in 2024. Fidelity Charitable alone saw donor accounts grow 10% and average grant sizes increase by 15%.

But most nonprofits are underperforming, raising only $0.13 per online dollar through DAFs. That means nonprofits are missing significant revenue from donors who already have the funds allocated for giving.

Should you really care?

Yes. The growth trajectory is clear.

However, it’s important to remember that DAF giving operates at much higher dollar amounts with more sophisticated, strategic donors. Organizations that build comprehensive DAF strategies now will capture more high-value gifts and develop stronger relationships with your most committed supporters.

Do this now

1. Develop DAF-specific cultivation strategies that acknowledge both the unique nature of these gifts and the donors' strategic approach to giving. Recognize that DAF donors often give to fewer organizations but with larger, more sustained support.
2. Create dedicated donation pages for donors who use DAFs. These separate landing pages should have streamlined processes that respect DAF donors' sophistication and different grant-making timelines.
3. Prepare for the upcoming wealth transfer by identifying younger donors (Gen X and Millennials) who may be prime candidates for DAF education, especially those already giving monthly or making complex asset gifts.