Your High-Net-Worth Donors Want to Give You More—Make It Easy with DAFs

Philanthropy is evolving, and Donor-Advised Funds (DAFs) are leading the way.

With over $251.52 billion in assets as of 2023, DAFs present a huge opportunity for nonprofits – if they know how to connect with these donors.

But let’s be honest—many organizations aren’t sure how to approach DAF fundraising. The good news? It’s easier than you think, and we’re here to guide you through it.

What Are DAFs and Why Should You Care?

A few months ago, my colleague Pam Trzop wrote about how DAFs can elevate your year-end fundraising. To recap:

DAFs are charitable giving accounts managed by financial institutions and community foundations. Donors contribute funds, receive an immediate tax deduction, and decide when and where to distribute their gifts. It’s a flexible, strategic way to give—yet many nonprofits are tapping into this resource.

Consider these DAF trends from 2023:

• $59.43 billion in contributions
• $54.77 billion in grants distributed
• 24% average payout rate (nptrust.org)
• DAFs hold 17% of private foundation assets but distribute nearly 50% of total grant dollars
• The average DAF account size reached $141,120, underscoring the substantial giving potential available

Between 2020-2022, 78% of DAF accounts made at least one grant, and 59% of those grants were unrestricted (growyourgiving.org).

The 2024 DAF Fundraising Report highlights another major advantage: DAF donors have higher retention rates than other donor segments. Plus, giving frequency varies—some DAF donors contribute annually, while others give multiple times a year, emphasizing the importance of strategic stewardship.

While year-end giving remains strong, a significant percentage of DAF grants occur in Q2 and Q3—reinforcing the need for year-round donor engagement.

Who Uses DAFs?

According to Give Chariot, the landscape of DAF donors is evolving:

• High-Net-Worth Individuals (HNWIs): Traditionally, the primary users of DAFs, but now more accessible options are attracting a broader range of donors.
• Community and Cause-Specific Donors: Many donors choose DAFs sponsored by community foundations or single-issue charities to focus their philanthropy on specific geographies or causes.
• Growth and Accessibility: With over 1.95 million DAF accounts in the U.S., more donors are embracing this flexible giving option.

Building a Strong DAF Strategy: People, Processes, and Technology

People: Engaging the Right Donors and Teams

• Identify Key Donors: Use surveys and donor data to find supporters who may have DAFs.
• Who Are the Right Donors for DAFs?
  • High-Net-Worth Individuals (HNWIs): These donors have significant disposable income and use DAFs for strategic, tax-efficient giving.
  • Legacy and Planned Giving Donors: Individuals looking to make a long-term impact through structured giving.
  • Stock and Asset-Based Donors: Those who donate non-cash assets like stocks or real estate for tax benefits.
  • Philanthropy-Minded Millennials and Gen X Donors: Younger donors who are actively building long-term charitable strategies.
  • Corporate and Family Foundations: Organizations that use DAFs for structured and sustainable giving.
• Empower Your Board and Advocates: Many board members have DAFs—encourage them to lead by example and share their giving experiences.
• Train Your Team: Ensure development staff, finance teams, and fundraisers understand how DAFs work and can communicate the opportunity to donors.
• Make Donors Feel Valued: Send personalized thank-yous, showcase donor impact through tailored reports, and invite DAF donors to exclusive experiences.

Processes: Creating a Seamless Giving Experience

• Create a Dedicated DAF Giving Page: Make it easy for donors to contribute through their DAFs.
• Standardize Acknowledgment and Stewardship: Implement a consistent process for thanking DAF donors, even when their names aren’t disclosed.
• Ensure Compliance: Understand IRS rules to avoid missteps—DAF grants cannot be used for event tickets, memberships, or sponsorships.
• Track and Report DAF Donations: Use your CRM to tag, track, and measure DAF contributions separately.

Technology: Optimizing Digital Giving and Engagement

• Integrate DAF Giving Tools: Platforms like DAF Direct and Chariot allow donors to give in just a few clicks.
• Leverage Automation: Use digital retargeting, automated email sequences, and personalization tools to keep DAF giving top-of-mind.
• Ensure a Smooth Digital Experience: Optimize your donation pages for mobile, user-friendly navigation, and clear calls to action.
• Use Data Analytics: Segment donors based on behavior and giving patterns to tailor your outreach and maximize impact.

Keeping It Legal and Operationally Smooth

Watch Out for These Common Mistakes

• No Perks Allowed: DAF grants cannot be used for event tickets, memberships, or sponsorships.
• Be Careful with Pledges: While DAFs can fulfill pledges, there are restrictions on what donors can receive in return.

Make Tracking and Acknowledgment Easy

• Use Your CRM Wisely: Tag and track DAF gifts separately for accurate reporting.
• Automate Acknowledgment and Reporting: Streamline thank-you emails and impact reports using marketing automation tools.

Final Thoughts

If your nonprofit isn’t actively pursuing DAF donors, you’re missing out on a major funding stream. The good news? You don’t have to reinvent the wheel.

By focusing on people, processes, and technology, you can create a DAF strategy that drives results.

Let’s not leave money on the table—start engaging your DAF donors today!