Donor-Advised Funds

A donor-advised fund (DAF) is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. 

Donor-advised funds (DAFs) have surpassed foundations in popularity because of their benefits and flexibility for people who are able to give generously but don’t wish to start a foundation or put all their assets in a trust. While DAFs have existed for decades under the umbrella of community foundations in both the U.S. and Canada, they are now being embraced by other charities as well as by financial institutions.

DAFs provide various types of support, and grants can range from a few hundred dollars to many thousands. If you can manage to secure the first gift from a DAF for general operating support, then you may be able to set up a recurring annual gift to support your organization with no strings attached.

DAFs are the fastest growing source of philanthropy in the U.S. Tapping into this type of grant support is important for the future financial health of your organization.

DAFs are structured to support long-term giving. While DAFs are often pass-through organizations used to help simplify both giving and accounting, they are also used by donors who wish to distribute funds to charities over years, even generations. Securing the support of a DAF can mean long-term financial support—always a good thing! 

If your organization can identify and secure funding from a DAF you will want to keep the relationship going as long as possible. The competition is low for DAFs, and the support can be significant.

Many DAFs allow the donor to recommend recurring annual grants. This eliminates the need for the donor to initiate the grant each year. Encouraging a donor to make a recurring grant will significantly increase the likelihood of continued support to your organization since the donor won’t need to remember to select a recipient and set up the grant.

Be aware that there can be a gap between when the donation is set in motion and when your charity receives the money. The timing is often unpredictable, but can range from months to a year or more.

DAF sponsoring organizations (e.g. Rockefeller Philanthropic Advisors) do not make the grants, so sending them materials about your organization or grant proposals is a waste of resources.

Go to our Charitable Giving database for the U.S. or Canada and use the Type of Grantmaker filter to select “Community Foundation,” since many DAFs are managed by community foundations. If a community foundation administers a number of funds, those are often listed, but not necessarily described as DAFs.

DAFs can be challenging to locate, but as they become more public, we will be adding them to the Charitable Giving databases.

You want to gain the attention of those who have DAFs, so publicize that your organization accepts grants from these types of funds. Include DAFs as a giving option on your direct mail reply slips and online donation pages. 

Applications to DAFs vary widely. Some simply need a one-page description of the project you propose, while others may want a full-blown proposal. Working with the manager of the fund will help you learn more about the application guidelines. Don’t be shy about asking for this information!

There is usually a very simple reporting process for DAFs.

Gifts from DAFs should be credited to both the sponsoring organization and the donor. The sponsoring organization is the official donor, so you should record the gift on a donor record for that organization (e.g. Vanguard Charitable Endowment). The gift should also then be “soft credited” to the specific donor that recommended the grant, unless the donor has asked to be anonymous.

You’ll also want to thank both the sponsoring organization and the donor. There’s no need to send them a receipt—they’ve already received the tax benefit—but you can strengthen your relationship by sending a thoughtful thank you letter.