As a company that works with DAF payments every single day, one of the most common questions we receive from smaller nonprofits is "How do we get started?"
In our fourth session in this year's DAF Day series, Debra Shapira, #HalfMyDAF leader & Brighton Jones wealth advisor, Amy Jacobs, Co-Founder of DAF Day CLT, and Shaista Keating, VP of Development & Global Head of Emerging Corporate Alliances at TechSoup, joined us to discuss the fundamentals of DAFs for smaller nonprofits.
In this recap of the 1-hr session, we'll cover:
- What Is a Donor-Advised Fund?
- What Can a DAF DO or NOT DO?
- Current Data on DAFs
- How Smaller Nonprofits Can Raise More from DAF Donors
- Taking Small Steps Towards Big Impact
- Next Steps
- Webinar Q&A
1. What Is a Donor-Advised Fund?
At its core, a Donor-Advised Fund (DAF) is a tax-advantaged account dedicated to charitable giving, that works similarly to a charitable checking account. A donor deposits money or assets with a sponsoring organization like a financial institution or community foundation and takes the full tax deduction immediately. The funds are invested, and grow tax-free until the donor recommends a grant to a nonprofit.
Photo Source: "What is a DAF," Chariot blog.
DAF accounts are maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization.
Sponsors generally fall into three groups:
- National providers (Fidelity Charitable, DAFgiving360, Vanguard Charitable): Large, financial-services-affiliated sponsors that serve hundreds of thousands of donors nationwide
- Community foundations: Regional sponsors that are often connected to local nonprofits and donors
- Single-Issue Sponsors: Sponsors organized around a specific cause, identity, or faith tradition
For a deeper walkthrough of the mechanics, Donor-Advised Funds 101: What Every Nonprofit Needs to Know and What Is a DAF? are good starting points.
2. What Can a DAF DO or NOT DO?
DAF grants have to follow rules set by the IRS and by the sponsor managing the account. The most important one: a DAF grant can't provide more than an incidental benefit to the donor. That rules out gala tickets, auction items, or any part of an event sponsorship that includes a meal or other benefit, even if the donor offers to pay the benefit portion out of pocket. This explanation from Greater Houston Community Foundation covers the details on bifurcated gifts.
DAF restrictions:
- No grants to individuals. The recipient has to be an eligible charity
- No binding pledges. A donor can express a non-binding "pledge of intention" to recommend future grants, but they can't sign a legally enforceable pledge funded by a DAF. See more guidance from National Philanthropic Trust.
- No payment for services rendered. A DAF grant is a gift, not a purchase or a contract payment.
- The sponsor has final approval on every grant, even one the donor has already told you is coming.
If your organization doesn't already have a written policy for handling these situations, a DAF gift acceptance policy gives you language to point to when a donor pushes back. It's also worth standardizing how your team records DAF sponsors in your CRM from day one. A DAF provider directory helps keep sponsor names consistent for easier reporting.
3. Current Data on DAFs
DAFs have grown from a niche planned-giving tool into one of the fastest-growing parts of individual philanthropy. Total DAF assets now stand at $326.5 billion, across 3.56 million accounts, with $64.9 billion granted to nonprofits in the most recent year of data. The Annual DAF Report tracks the full trend line.
The 2026 DAF Fundraising Report by Chariot & K2D Strategies found:
- Median DAF revenue grew 75% between 2021 and 2025, compared to 9% for non-DAF giving.
- Donors who switched to DAF giving increased their gifts by an average of 10x.
- Two-thirds of DAF gifts are under $1,000, so this isn't just a major-donor channel.
- DAF donors retain at a rate 13 percentage points higher than non-DAF donors.
The full report breaks this down further by sector, with case studies from organizations that built DAF strategies from scratch.
4. How Smaller Nonprofits Can Raise More from DAF Donors
Communication
The goal is reminding donors: many simply forget they have a DAF or won't think to use it unless it's easily accessible. When donors give from a DAF, they give substantially more. Optimize your communication strategy for DAF giving using the following steps:
- A DAF call out on your "Ways to Give" page of your website (if not a dedicated page to DAFs).
- Make sure your EIN is easy to discover on your website (along with your legal name and address)
- Include a reminder about using your Donor Advised Fund in email, mail & text appeals.
- Mention when you can use your DAF during events (like general donations, a paddle raise, or "fund a need" moment at a gala).
- Bring up DAFs in donor conversations and learn from them.
The ask is different when it's coming from a donor-advised fund. This is money they already gave away. The only decision left is whether to let it sit or send it out.
Data
A DAF gift usually arrives looking like it came from an institution, such as Fidelity Charitable, rather than from a person. That makes it easy to log as a generic check and lose the details that actually matter. Personal details, when given, should be tracked for every DAF gift.
The goal is not just clean accounting. It is, with the data we capture, relationship intelligence.
Curing Your DAF Data covers the common tracking mistakes and ways to test your data.
Stewardship
It's a common myth that DAF gifts are mostly anonymous (only 3.7% of DAF grants are anonymous). The vast majority of donors choose to share at least some information, and even when a gift arrives with less information than usual, that's often a limit of the sponsor's platform, not a sign the donor wants to stay hidden.
If you do get contact information along with a DAF gift, treat that donor the way you would any high potential donor: thank them, ask how they'd like to hear from you, and keep them updated on your work.
Tech
Like any donation, user experience and reducing friction are key. 98% of DAF donors are using an online portal to make their gifts, which makes them digital donors. Meet their expectations by integrating DAF giving into your donation experiences and enroll in digital grant payments wherever you can.
DAFpay is a payment button that lets a donor give directly from their DAF at checkout, the same way they'd choose a credit card or Apple Pay, without having to leave your site or take extra steps. Dozens of fundraising platforms already have DAFpay integrated, so be sure to turn it on or encourage your provider to work with Chariot on the integration if they don't have it.
How DAF gifts ultimately get delivered also matter to donors. They can often see in their portal if your organization isn't signed up for e-pay, creating unnecessary hesitation at the point of donation. Be sure to proactively enroll with platforms for digital grant payment, like Chariot.
5. Taking Small Steps Towards Big Impact
DAF Day is a national giving day for donor-advised fund holders, similar to Giving Tuesday, happening this year on October 8th. For a first DAF Day campaign, pick one action and do it well rather than trying to build a full strategy. View our DAF day marketing toolkit and a recap on last year’s DAF Day awards for inspiration.
Someone raised their hand at a conference I was speaking at and said the first DAF Day, they decided to send an email to their donors [mentioning DAF Day]. They're a small school in Wisconsin and they raised $12,000 from seven first-time DAF donors from their existing audience.
Ideas for your first DAF Day:
- Claim your Chariot Account & opt into DAF Day with your preferred URL for DAF donors. This URL will live on the DAF Day Giving Page.
- Download the DAF Day marketing toolkit
- Send an email naming DAF Day specifically (easy templates are in the marketing toolkit)
- Have 1:1 conversations with your board or large existing donors asking if they have a DAF and can support your organization on DAF Day.
- Update your website so DAF giving is easy to find.
6. Next Steps
- Still receiving DAF grants by paper check? Set up a free Chariot account for electronic disbursements instead.
- Share educational resources with your team, such as "So… What is a DAF?" and "DAFs 101." Check out more resources here.
- Read the Annual DAF Report for an industry-wide view on DAFs. Built on IRS Form 990 data from 1,485 DAF sponsors, it covers total accounts (3.56M), contributions ($89.6B), grants ($64.9B), assets ($326B), and payout rates.
7. Webinar Q&A
Is my organization the "DAF sponsor," or is the donor's brokerage?
Neither. The sponsor is a separate 501(c)(3), like Fidelity Charitable, that legally holds and administers the DAF. It's affiliated with the brokerage but is its own charitable entity. Your organization is just the grant recipient.
Can a donor use their DAF to cover part of a gala ticket and pay the rest personally?
No. If any part of the payment provides more than an incidental benefit, the DAF can't cover any of it. The donor can pay for the ticket personally and make a separate DAF gift instead, but the two can't be combined.
Can a DAF fund a multi-year pledge?
Not as a binding pledge. Sponsors accept a non-binding "intention" to recommend future grants, and you can track a multi-year plan internally, but the grant request itself can't include binding pledge language.
Can a sponsor deny a grant recommendation?
Yes. Common reasons include loss of 501(c)(3) status, personal benefit to the donor, a mission conflict some sponsors screen for, or legal issues involving the recipient.
What happens to a DAF when the account holder dies?
Most sponsors let donors name a successor advisor or charitable beneficiaries in advance. Without one named, each sponsor has its own default process for distributing the remaining balance.
When can I use my DAF during events?
A DAF can be used at any point during an event where the donor isn't receiving something in exchange for the gift. That covers general donations made at the event, a paddle raise, and a "fund a need" moment at a gala, all of which are pure gifts with no goods or services attached. What it can't cover is a ticket price, a table sponsorship, or anything else where the donor gets something in return for the payment.
Does DAFpay's processing fee mean I get less than the full donation, and is it worth it for a small nonprofit?
Yes, DAFpay charges a processing fee, typically around 2.9%, similar to a credit card transaction fee. For most small nonprofits, that trade-off is worth it. DAF donors tend to give substantially more and retain at a higher rate than typical donors.
Do nonprofits need a Chariot account to participate in DAF Day?
No. Any nonprofit can participate in DAF Day regardless of whether they use Chariot. However, a Chariot account makes it easier to receive DAF grants electronically and allows your nonprofit to be featured on the DAF Day Giving page.
Would the nonprofit receiving the DAF grant have to provide a tax receipt to the DAF sponsor, versus the DAF account holder?
Neither party gets a tax receipt for the grant itself. The donor already received their deduction when they contributed to the DAF, and the DAF sponsor, not the donor, is technically the one making the grant, so there's no new deductible transaction for either of them.
