The Nonprofit's Guide to Donor-Advised Fund Grants

08.18.2025

Nonprofit organizations have typically treated donor-advised funds (DAFs) as a niche reserved for individuals boasting a high net worth. However, times have changed. DAFs are increasingly playing a pivotal role in funding charitable organizations and their initiatives. And more NPOs are making it their prerogative to better understand how DAFs work so they can potentially use them as a funding source in the future.

But DAFs are still largely misunderstood. This guide will dive into the world of DAFs, clearing up misconceptions, explaining how they work, and how your nonprofit can build relationships with DAF donors.

What is a Donor-Advised Fund (DAF)?

A donor-advised fund (DAF) is a charitable giving account (or a DAF account) established through a sponsoring organization or entity. That could be a national charity (i.e Fidelity Charitable), a community foundation, or a faith-based institution. Donors provide cash or non-cash assets such as appreciated securities, real estate, or even cryptocurrency to the DAF. In turn, they receive an instant tax deduction of their contribution.

Once the contribution has been sent, the sponsoring organization handles and invests the funds, usually allowing these assets to accumulate value, tax-free. Donors then recommend grants from their DAF to eligible nonprofits as time passes. Although the sponsoring organization makes the final decision when approving grants, most uphold donor recommendations unless the recipient isn’t a legitimate charity or the grant would extend a personal benefit to the donor.

Key Features of DAFs

Immediate tax benefit—Donors get a tax deduction within the same year they contribute to the DAF.
Flexible giving vehicles—Donors can recommend grants any time, to any public charity that carries IRS-qualified 501(c)(3) designation.
Professional management—The sponsoring organization manages all administrative, compliance, and investment obligations.

How DAFs Differ from Traditional Foundations

Both DAFs and private foundations act as vehicles for charitable donations. However, they have some fundamental differences.

Setup & Management

DAFs—Simple and managed by the sponsoring organization.
Privation Foundations—Complex, requiring strategic legal and administrative oversight.

Tax Deduction

DAFs—Immediate, up to 60% of AGI for cash, 30% for given assets.
Privation Foundations— Lower limits, usually only cost basis for assets

Grantmaking

DAFs—Donor makes recommendation, then the sponsor approves.
Private Foundation—The foundation board decides.

Privacy

DAFs—Donors can decide to remain anonymous.
Private Foundation—Grant info is made public through IRS filings.

Payout Requirement

DAFs—No legal minimum contribution to abide by, but payout rates are higher than average.
Private Foundation—Minimum annual 5% requirement

Speed

DAFs—Grants can be made fast and online.
Private Foundation—Slower and requires approval from the board.

Ultimately, DAFs provide greater flexibility to donors, and enable their philanthropic efforts to be more strategic in the long-term.

How Nonprofits Can Receive DAF Grants

Receiving DAF grants is usually straightforward. However, it’s best to be mindful of some best practices to ensure there are no complications.

5019(c)(3) Status is a Requirement—Your nonprofit organization must be a public charity with
Donor Recommendation—A DAF donor recommends your organization as a recipient for a grant. The donor may provide details such as your legal name, EIN, and mailing address to guarantee proper delivery.
Sponsor Approval—The DAF sponsor will then review the recommendation to confirm that you are an eligible recipient. Most recommendations get approved unless the grant shows signs of providing personal benefit to the donor, or if the recipient isn’t a qualified nonprofit organization.
Grant Disbursement—Once approval goes through, the sponsor will send the grant directly to your nonprofit. This can happen by check or through an electronic transfer (E-transfer).
Searchability—Verify your nonprofit is listed and easily discoverable in notable DAF databases and platforms. Many DAF sponsors use tools such as GuideStar or other directories to confirm an organization’s nonprofit status.

Popular DAF Sponsors and Platforms

Numerous organizations offer DAFs, each with their own approaches and tools for doing so. There are a few categories that standout and worth considering.

National Sponsors

Fidelity Charitable—Fidelity charitable is the largest grantmaking organization in the country, as well as an independent 501(c)(3) public charity. They help over 350,000 donors bolster their charitable impact through their the Giving Account, which distributed $14.9 billion in 2024 and has supported over 433,000 nonprofits since opening its doors in 1991.
Schwab Charitable—This leading source of DAFs provides nonprofits with simple, tax-efficient investing for charitable donations that lets donors contribute a variety of assets, receive tax benefits immediately, and recommends grants to any nonprofit that’s IRS-certified.
Vanguard Charitable—Founded in 1997, Vanguard Charitable is an independent 501(c)(3) organization that provides donor-advised funds, supplying donors with flexible, cost-effective, and transparent methods to grant assets to charities that align with their investment philosophy.
American Endowment Foundation (AEF)—The AEF is one the largest independent donor-advised fund sponsors in the country. They focus exclusively on DAF administration and partnering with advisors and donors to broaden philanthropy, having contributed to $13billion in donations since opening in 1993.
Bank of America Charitable Gift Fund—The Bank of America Charitable Gift Fund is a 501(c)(3) public charity that assists donors in achieving their charitable goals through DAFs. They allow tax-efficient giving with a broad range of supported asset types and supporting qualified charities.

Community Foundations and Faith-Based Institutions

Greater Kansas City Community Foundation—This foundation is a top-ranked organization that manages over $6 billion in assets and over 7,000 charitable funds, primarily focused on improving quality of life.
Jewish Federations—This is a secular nonprofit organization visible throughout numerous metropolitan areas, offering philanthropic assistance, social services, and humanitarian aid both locally and globally. They’ve collectively raised over $2 billion through a network of over 350 communities.
National Christian Foundation—The National Christian Foundation (NCF) is the largest provider of funds for U.S.-based Christian donors, facilitating cash gifts and non-cash types of assets, having granted more than $14 billion to various initiatives and qualified charities.
Catholic Charities Donor-Advised Fund—The Catholic Charities USA Donor-Advised Fund lets donors make irrevocable charitable donations, receive immediate tax deductions, and recommend grants to NPOs.

Giving Platforms

DAF Direct—Lets nonprofits add a DAF giving option to their website, allowing donors to submit grant recommendations directly online.
Chariot—Offers a robust director of DAF providers and tools to streamline DAF submission process.
DAFpay—Enables electronic DAF giving and improves data collection for NPOs.

Tips for Attracting DAF

As of 2022, DAFs hold over $234 billion in assets, meaning that nonprofit organizations should strongly consider these entities for charitable contributions. Of course, relying on DAFs to support your giving strategy requires a sound approach—it can’t be left to chance.

Make It Simple

Put a “Give from Your DAF” button on your website’s donation page
Access platforms such as DAF Direct or software to simplify the process

Include DAF Language in Appeals

Allude to DAF giving in your fundraising collateral, newsletters, and event promotion materials.

Educate Donors

Donors may have DAFs but are unaware they can use them towards your charitable purposes
Schedule a webinar or offer FAQs about DAF giving.

Develop Relationships with Advisors

Make connections with wealth managers, financial advisors, and community foundations since they often steer client’s philanthropic goals and decisions.

Thank DAF Donors Personally

If you have an anonymous donor, send the sponsoring organization a thank-you and acknowledge the name of the fund if it’s given.

Challenges and Considerations

DAFs can bestow numerous benefits for nonprofits, some of which we touched on earlier. However, they can also pose some challenges as well, and it’s important to know what they are ahead of time.

Lack of Transparency

Nonprofits may sometimes lack the knowledge to identify who initiated a DAF contribution since donors can choose to stay anonymous.
Although only few DAF grants are anonymous, they can make stewardship and relationship-building more challenging to sustain.

Timing and Predictability

DAF gifts may be given inconsistently from year to year, making it tricky to project revenue forecasts.
Since DAF grants are donor-driven, nonprofits have less control over timing.

Limited Access

Nonprofits can’t apply for DAF grants directly like they can for foundation grants, and must receive a donor recommendation first.

Data Management

Tracking DAF donations and linking them accurately to their donors can be a complex undertaking, especially when multiple sponsors are involved.

Regulatory Considerations

Active congressional debates about DAF regulations, including potential payout requirements and donor disclosure, may reshape how DAFs function in the near future.

Make the Most of DAF Account Contributions

Donor-advised funds are now a more widespread method of funding for nonprofit organizations, and American philanthropy in general. That opens major opportunities for nonprofits like yours in terms of receiving funding for charitable goals. And unbeknownst to you, some of your favorite charities may be able to offer cash or appreciated assets to facilitate their philanthropic goals and your charitable purpose.

Therefore, if you’re looking for an alternative yet steady source of funding, consider donor-advised funds as a potential option. They may propel your fundraising efforts to new heights not yet realized by other sources.

Frequently Asked Questions

Q: How do I know if a donor used a DAF to make a gift?

A: Donor-assisted funds usually arrive with a letter or check from the sponsor, and may even include the donor’s name or the fund. Anonymous donations, however, may include the fund’s name or sponsor.

Q: Can my nonprofit apply directly for a DAF grant?

A: No. DAF grants are strictly initiated by donors. To increase your odds of receiving a DAF grant, try to foster relationships and encourage donors to send your organization a recommendation.

Q: How quickly do DAFs distribute funds?

A: Typically, a donor-advised fund has high payout rates, with over half of DAFs granting out over 50% of their initial contributions within three years.