Donor-Advised Fund are More Than a Giving Channel – They are a Donor Signal

Once viewed as a niche vehicle used primarily by wealthy donors, donor-advised funds (DAFs) have moved into the mainstream. Is your nonprofit ready to receive them?  

Today, DAFs represent about 15% of all charitable giving, yet many organizations still treat them primarily as a payment mechanism or view them as the exclusive territory of major or planned-giving donors.  

The reality is that DAFs have become more accessible, with gifts ranging in size. In fact, two-thirds of DAF gifts are under $1,000. Nonprofits should consider viewing DAFs not just as a way donors give, but as a source of information about donor behavior and potential.  

The DAF Donor Is Not Who You Might Think 

One common misconception is that DAF donors are primarily ultra-wealthy donors who don’t need traditional cultivation or stewardship.  

A DAF is a charitable giving account administered by a 501(c)(3) organization, such as Fidelity Charitable, community foundations or faith-based sponsors. The donor receives the charitable deduction when the DAF is funded (an irrevocable contribution), and the sponsor is then responsible for administering the account. The donor acts as the fund advisor and makes recommendations on the recipient organization. 

Many DAF donors give directly through IRA rollovers and other channels. A DAF is one vehicle for giving — not the donor’s entire giving identity. Thanks to major investment management companies like Fidelity, Schwab, and Vanguard, DAFs have become more accessible to a wide range of donors.  

The median DAF gift is around $300, while the median DAF account size is around $25,000–$30,000. Organizations should take steps to avoid putting these donors into a separate bucket and stop there. Instead, they should step back and look at the whole donor relationship.  

Make DAF Giving as Easy as Any Other Form of Giving 

Like any other donor, DAF donors expect the giving process to be as simple as possible.  

If donors cannot easily figure out how to make a DAF gift, they may abandon the process. For example, donors may have to leave the nonprofit’s website, download forms, or contact a staff member before completing a DAF gift. Compare that with the ease of giving by credit card, ACH, PayPal, or digital wallets.  

Technology can reduce friction and make DAF giving part of the normal giving experience. Here are some practical recommendations:  

• Add a visible DAF option to the giving form 
• Include a simple explanation of DAFs  
• Consider QR codes or other tools that make the process easier 
• Train staff to help donors navigate the process and answer questions 

The goal is simple: Meet donors where they are and make it easy for them to give. 

A DAF Gift Is a Signal – Not Just Revenue 

Rather than viewing a DAF gift simply as money coming in, fundraisers should ask what the gift tells them about the donor. 

A DAF gift can indicate that a donor has already committed assets to charitable giving. It may also point to future fundraising potential and create an opportunity for deeper donor research and stewardship. 

Fundraising should use the information to learn more about the donor’s interest and giving behavior, not just record the transaction. DAFs can be part of a donor’s broader charitable giving, making a DAF gift a potential signal worth paying attention to when considering future planned-giving conversations. 

That doesn’t mean every DAF donor is automatically a major or planned-giving prospect, but the gift itself is worth noticing. In a recent podcast discussion, Trent and I explored how DAF giving may signal donor commitment and engagement — and why organizations may be overlooking it. 

DAF Donations Don’t Equal Unknown 

One common assumption about DAFs is that these gifts are anonymous, which can prevent your organization from properly stewarding donors.  

However, anonymous to the public doesn’t necessarily mean anonymous to the nonprofit. In fact, fewer than 4% of DAF gifts are anonymous, according to the DAF Research Collaborative. 

The bigger problem may be how organizations code, reconcile, and record DAF gifts. Fundraisers should try to identify and steward the individual donor, rather than treating the DAF sponsor as the donor.  

Here are five steps nonprofits can take over time to integrate DAF giving:  

1. Educate your staff. Make sure development, finance, programs, and communications understand how DAF giving works and why it matters. 

2. Audit the giving experience. Pretend you are a donor trying to make a DAF gift to your own organization. How many steps does it take? Identify the points of friction and what should change. 

3. Make DAF giving visible. Add this option to your giving form and donor communications.  

4. Go beyond the gift. Look at your DAF donors differently. Don’t just record the gift – research and steward the person behind it.  

5. Ask better questions. For appropriate donors, consider whether a DAF or a DAF succession plan could be part of a broader conversation around their charitable intentions.  

DAFs Belong in Your Broader Fundraising Strategy 

DAFs, while often still misunderstood or overlooked, have become a mainstream way for donors to give.  

The organizations that aren’t prepared to receive those gifts or simply treat them as another payment method are missing important opportunities.  

The key is making DAF giving easy and paying attention to what that giving behavior tells you. A DAF gift may be a transaction, but it can also be an invitation to learn more.  

The organizations best positioned for the future of DAF giving won’t simply be the ones that accept DAFs. They’ll be the ones that understand the donors behind them and use that insight to develop deeper relationships.  

This blog is based on an episode of the Go Beyond Fundraising Podcast. Listen here.