Most fundraisers realize they need to adapt to donor-advised funds, even if many are ambivalent about them.

Some fundraisers find DAFs, which let donors set aside money for charitable contributions, an obstacle to be hurdled on the way to long-term donor relationships, while others have shifted from caution to affection.

H. Daniel Heist, assistant professor of public administration and nonprofit management at Brigham Young University, worked with his colleagues to interview 46 fundraisers last year for a recently published article, “How Donor-Advised Funds Change Fundraising.”

“I was honestly surprised,” he says, “how positive most fundraisers were about DAFs.”

DAFs are growing in popularity. Barriers to entry — such as minimums for opening an account — are dropping, and the number of DAF sponsors is rising, with more than 1,000 now in the United States, according to a 2024 report by Chariot and K2D Strategies. Chariot provides nonprofits with a tool they can embed in their websites to streamline DAF giving, and K2D Strategies is a marketing and fundraising agency.

Fundraisers are well aware of the power of DAFs. Twenty nonprofits surveyed for the Chariot/K2D Strategies report found that from 2019 to 2023, their donations from DAFs grew 214 times faster than non-DAF revenue. These gifts were 19 percent larger, and retention among supporters who gave through DAFs was stronger.

With all this opportunity, consultants and marketers believe DAF donors need more of fundraisers’ attention. “In most cases, DAF giving is an afterthought in outbound marketing and on websites,” the Chariot/K2D Strategies report says.

Genevieve Shaker, professor of philanthropic studies at the Lilly Family School of Philanthropy, in Indianapolis, worked with Heist in the DAF Research Collaborative, which seeks to improve public understanding of DAFs, on the study of these funds’ influence on fundraising. She says she was surprised so many groups didn’t yet have fundraising strategies and systems focused on gifts from DAFs, given the popularity of these funds.

Sixty percent of nearly 500 fundraisers surveyed last year for a report by Freewill, a corporation that helps nonprofits get planned gifts, said one of their biggest challenges with DAFs was not knowing which donors have them. Twenty-nine percent of those surveyed said they didn’t know how to ask for DAF donations.

To help you be more strategic about raising money from DAFs, here are some key tips from experts.

Step Up DAF-Focused Communication

Many organizations are leaving DAF donations on the table, experts say, just by remaining silent about them. When talking to all current and potential donors, consultants recommend asking if they have a DAF. Many fundraisers say discovering a donor has a DAF is a strong start for a conversation, since that indicates a commitment to giving. Talking to supporters about DAFs, says Shaker, “builds fundraiser confidence and comfort level in qualifying donors.”

The Chariot/K2D Strategies report suggests nine ways to target DAF donors in your outreach. Among them: having a page about DAFs on your organization’s website; having a DAF-specific link in email solicitations; using DAF-specific QR codes at events; educating participants in peer-to-peer fundraising to mention these funds, and profiling DAF donors in marketing.

When communicating with supporters, remember that many DAF sponsoring organizations allow fund owners to set up automatic monthly or annual recurring donations. You should suggest donors use that feature, DAF sponsors say.

Make It Easy for DAF Donors to Give

Most everyone has had a frustrating online experience in which it takes 21 clicks to accomplish a simple task, and they give up before finishing. Consultants recommend streamlining online giving for DAF donors. One option is to have an easy-to-find portal on a prominent web page that lets donors make a DAF contribution without going to a third-party site.

Another simple way to improve the donor experience that often gets overlooked is to give supporters your nonprofit’s federal tax identification number, most likely an Employee Identification Number. Provide this number, which the Internal Revenue Service uses to identify an organization, when soliciting a gift, consultants say, and also make it easy to locate on your website.

“The tax ID number is the best way to ensure that the correct charity bubbles to the top of a search,” says Rebecca Morphis, vice president for thought leadership at Fidelity Charitable, which works with more than 320,000 donors, has distributed $84.5 billion in funds, and has a web page with resources for nonprofits who want to connect with DAF donors.

It’s also important, consultants say, to eliminate variance in your nonprofit’s name, ensuring it matches Internal Revenue Service records, and to make the address where you want to receive checks easy to find on your website, a basic that is often missing.

Identify Donors Who Have DAFs

In Heist’s article, he and his fellow authors outline how DAFs have altered classical relationship-based fundraising.

The authors suggest that in DAF fundraising, there are two ways of identifying donors. The first is reactive identification — when you get a gift from a DAF and then identify the donor. The second way is proactive identification during donor cultivation, when you ask if supporters have DAFs or use a question like “What is the best way for you to contribute to us?”

When a donor says they favor DAFs, researchers say it’s vital to get the exact name of their account and that of the sponsoring organization, and to enter the information in your database so you can track and steward that individual.

Ensure Proper Gift Processing and Record Keeping

Consultants emphasize the importance of careful, accurate gift processing with DAF donations because it sets up another stage, which is detective work, when necessary, to determine who the actual donor was. If the DAF is in a vague name such as the “Smith Fund,” or a family pet, that job can be difficult.

All possible information should be gleaned from a check or any letter that accompanies it, consultants say. Fidelity Charitable’s Morphis says gifts to nonprofits from her organization include grant-transmittal letters that, unless the donor has requested anonymity, include the individual’s details, including their address and the name of their account.

When working with donor databases, the Chariot/K2D Strategies report suggests a simple “yes or no” checkbox to signal DAF gifts. The “hard credit,” which determines how the gift is entered in a nonprofit’s financial records, needs to go to the DAF sponsor. A “soft credit,” or record of who influenced the gift, should go to the donor. If the gift stems from a peer-to-peer event, the person who suggested the gift recipient should also be awarded soft credit. Other data should include the date the gift was made, payment type, and attribution to the marketing channel that triggered it, such as email, website, or event.

A major theme of researchers’ advice on DAF fundraising is that it “takes a village.”

“Sometimes when we think about front-line fundraising and relationship building, there’s an assumption that all the processing and practical things, tactical things, are working as they should,” says the Lilly School’s Shaker. “And we can gloss over that.” But the research she did with Heist, she says, raises “the importance of the whole team when it comes to DAF grants.”

Suggest DAFs for Gifts of Appreciated Assets

DAFs have major advantages for donors who want to donate highly appreciated assets including real estate, cryptocurrency, equities, and complex gifts such as shares in a business. The donors don’t have to pay capital gains tax and can often get a tax deduction. Some DAF sponsors can handle the appraisal and sale of real estate, art, or shares in a business, tasks many nonprofits don’t want to administer.

At Fidelity Charitable, 66 percent of donations are from non-cash assets, says Morphis. “In some cases, nonprofits can accept stock,” she says, “but in many cases, it’s clunky or difficult for them to do that. It’s very simple for us to do it.”

Include DAF Donors in Your Pipeline for Planned Giving

“Donor-advised fund donors are planners,” says Morphis. “They tend to be, by and large, fairly financially sophisticated. They’re thinking about their future and their legacy.”

DAF donors can name heirs who can take over management of their funds or plan for final distribution of their money. “Ninety-two percent of DAF accounts have a succession plan,” says Brigham Young’s Heist. His research, however, indicated that fundraisers should be more confident in suggesting legacy gifts to these supporters.

Connect With DAF Sponsors to Reach Donors

Consultants agree that sending thank you notes to sponsoring organizations, especially national ones, is a waste of time. Fidelity Charitable, for example, stays “cause and location neutral,” when working with donors, says Morphis.

But the majority of DAF sponsors are community foundations, according to the National Philanthropic Trust’s most recent report. Community foundations vary greatly in how they work with fundraisers, but some welcome meetings with nonprofits.

The Rose Community Foundation, in Denver, holds about $47 million in DAFs for 165 donors, a relatively small number. Judy Altenberg, the foundation’s vice president for philanthropic services, says her foundation welcomes calls and emails from nonprofits working in the Denver area. She does not send out mass emails to donors asking them if they want to fund newly discovered nonprofits. But she will introduce nonprofit staff members to supporters if an organization’s mission matches a donor’s interests. Likewise, some of her supporters delight in discovering new and innovative nonprofits and tell the foundation about them. “The advantage of knowing our fund holders so well is that I understand what their interest areas are,” says Altenberg. “We’ve made some great connections over the years.”

Melissa Bank Stepno is president and CEO of the Helen Brown Group, a consulting agency for fundraisers which also runs DAFinitive, a searchable database of information about DAFs. She gives the example of a hospital that arranged a tour of its facilities for community foundation representatives, much as it might do for a major donor. Hospital staff prepared for the tour by looking at all the DAF gifts it had gotten through the foundation. During the tour, they suggested the community foundation staff talk to those donors about what they had seen or introduce the hospital to them. “I think it’s an amazing strategy, and more nonprofits should use it,” says Stepno.

When assessing whether fundraisers are getting what they need from DAF sponsors, consultants say they see a mixed picture. Sponsors, says Stepno, aren’t “trying to not be helpful.” But, she adds, “Some of them just aren’t providing the information that’s really needed. Others say that they are, but it’s not getting transmitted downstream.”

“There’s still a communications gap,” she says.

While tactics may shift when working with DAF donors, the fundraising goal remains the same. “Nothing changes about your fundraising strategy at the end of the day,” says Fidelity Charitable’s Morphis. “Your goal is to convert your supporters from a transaction to a relationship. And there is nothing about a donor using a donor-advised fund that prevents or changes that fundamental intent.”