The nonprofit guide to donor-advised funds and year-end giving

What are donor-advised funds (and why do people use them)?

If you’re not already familiar with donor-advised funds (DAF), they’re essentially a charitable investment account. A donor puts money (or assets like stock) into the account and receives an immediate tax deduction when doing so.

Those funds can grow tax-free until the donor directs grants to the nonprofits and charities they want to support (you might hear these grants called “donor-advised fund distributions”).

DAFs aren’t managed by the donor directly — they’re held and administered by a sponsoring organization. Popular ones include Fidelity Charitable, Vanguard Charitable, and DAFgiving360, and many community foundations.

Who uses donor-advised funds?

Many financial advisors use DAFs as practical tools for clients looking to take advantage of tax benefits while also supporting causes they care about.

Donor-advised funds are often associated with high-net-worth individuals, with a paper from the National Bureau of Economic Research estimating the annual income of an average DAF donor at $1,361,651. Additionally, DAFs appeal to an older and more established crowd, with Baby Boomers representing 49% of all DAF advisors.

But generalities aside, DAFs are becoming more accessible to a broader variety of donors, including:

• Individuals spanning a wide income range: DAFs are no longer reserved for the ultra-wealthy. Many DAFs have minimum initial contributions between $5,000 and $25,000, making them viable for a variety of income levels.
• Families who want to build a giving legacy: Some families want to establish a tradition of giving and use DAFs to do so. Research from the Dorothy A. Johnson Center for Philanthropy found that 92% of DAFs have a succession plan in place, proving that these funds often carry on the philanthropic values of the original donor even after they’re gone.
• Business owners who want to maximize the tax benefits: Business owners who experience large, one-time financial gains — like the sale of a business — can make a sizable contribution to a DAF while spreading grant distributions over time. This means they get a large donor-advised fund tax deduction during a high-earning year, without needing to give all the money to nonprofits at once.
• People with appreciated assets: Donating stocks, real estate, or cryptocurrency through a DAF allows donors to avoid capital gains taxes while still making meaningful contributions to their chosen nonprofits.

Needless to say, DAFs appeal to a wide array of people — and the popularity of these funds persists. Data from the National Philanthropic Trust states that there were 1,782,281 individual DAF accounts in 2023 and that these funds granted $54.77 billion to nonprofits during that year.

Why do people use donor-advised funds?

So, what makes a DAF preferable to donating directly to a charity or nonprofit? Why have this account in the middle? There are plenty of practical reasons:

• Tax advantages: Donors receive an immediate tax deduction when they contribute to a DAF, even if the money isn’t distributed to nonprofits until years later. That’s important to keep in mind, as the last-minute pushes in your nonprofit year-end campaigns won’t hold as much sway with DAF supporters as they do with those who are trying to squeeze in another tax break before the year wraps up.
• Strategic giving: Because the timing of the actual charitable contributions isn’t tied to a tax deduction, donors can make thoughtful and strategic donations—rather than feeling rushed or pressured to donate at the last minute.
• Simplicity and flexibility: Unlike private foundations, DAFs offer minimal administrative hassles, no required annual distributions, and lower setup costs.
• Investment growth: The money in a DAF can be invested and potentially grow over time, allowing the donor to make even larger contributions in the future.
• Privacy: Donors who want to remain anonymous can make DAF grants without revealing their identity to any receiving nonprofits.

Those benefits go a long way in explaining why DAFs remain one of the fastest growing vehicles for charitable giving.

5 practical tips to capture DAF donations at year-end

DAF donors aren’t like your typical last-minute year-end givers. Remember, they don’t need to give in December to claim a donor-advised fund tax deduction, so they aren’t coming to your campaigns with the same sense of urgency or eagerness.

Instead, these donors deserve (and prefer) dedicated and thoughtful experiences. Here are a few DAF giving strategies to help you refine your approach and tap into the power of DAF donations.

1. Created dedicated DAF landing pages

Adding a “give via DAF” option to your main checkout isn’t going to generate the results (or dollars) you want. It’s better to build a focused landing page that appeals specifically to DAF donors. It should include a clear, streamlined process for recommending a grant and messaging that emphasizes your mission and impact.

According to our own experiment here at Fundraise Up, this targeted approach really works. While only 0.8% of users clicked the DAFpay button in the main checkout, one organization received 400+ DAF gifts during a test period by using dedicated landing pages.

2. Launch your campaigns early

Because DAF donors aren’t under the wire, your timing matters. Start your DAF-focused campaigns in October or November, giving donors plenty of time to plan and recommend grants before the year-end rush.

Plus, earlier campaigns give you more time and space to tell your story and show impact, rather than just pushing urgency related to tax deductions.

3. Highlight your mission and impact over tax benefits

Your DAF donors understand tax deductions — it’s likely a key reason why they established a DAF in the first place. But a tax break isn’t going to be the main donation driver here.

Your nonprofit’s story deserves more emphasis than potential tax savings, so focus your messaging accordingly by highlighting the difference their gifts make. Call attention to your organization’s purpose, goals, and tangible outcomes to remind them their donation is meaningful — and not just a line on their tax return.

4. Refine your digital experience for DAF donors

DAF donors are strategic and intentional givers, so they rightfully expect a digital donation

experience that’s simple, clear, and tailored to their needs. You can achieve this by:

• Separating your DAF workflows from your standard donation flows
• Segmenting email campaigns for known DAF donors to deliver more relevant messaging
• Optimizing your landing pages for clarity, storytelling, and straightforward instructions

When the path to giving is simple and personalized, DAF donors are far more likely to take action — regardless of the time of year.

5. Track, measure, and steward

Getting a one-time donation is great, but people who have DAFs are generally committed, continuous givers — meaning you have a much better chance of getting repeat donations.

Track your DAF volume separately from your overall donations, compare your Q4 results year-over-year, and measure your donor retention to learn what’s working and what you can improve. Additionally, thoughtful stewardship and donor engagement strategies — like thank you emails, impact reports, and updates — can turn a one-time DAF grant into ongoing contributions.

Maximize DAF giving (without the year-end gimmicks)

Givers with donor-advised funds are a huge opportunity for your nonprofit, but you won’t reach these donors by pushing traditional year-end tax deadlines or urgent appeals. Instead, it’s about creating personalized experiences that match the way they give: thoughtfully, strategically, and intentionally.

With even small adjustments to your campaigns — like dedicated landing pages, earlier outreach, and clear storytelling — you can tap into the generosity of DAF donors and earn their lasting (rather than last-minute) support.

Read next: 10 donor engagement strategies that let tech supplement tradition