There's $328 Billion Sitting in Donor-Advised Funds.

Here's How to Unlock Them for your Mission.

I've spent the last five years consulting with nonprofits on fundraising strategy, after a decade working across government, family philanthropy, and the nonprofit sector itself. I call myself the Swiss Army knife of social impact work, because I've seen organizational challenges from just about every angle. And lately, one topic keeps coming up in almost every conversation I have with development staff, executive directors, and board members: donor-advised funds, or DAFs.

If that acronym makes you a little nervous, or if you've had a donor mention their DAF and you weren't quite sure how to respond, you're in good company. I recently led a session on this exact topic for a group of nonprofit leaders, and the questions in the room told me everything I needed to know: DAFs have become a massive part of the philanthropic landscape, and most organizations still don't have a clear strategy for engaging them.

Let's fix that.

What's Actually Happening With DAFs Right Now

Here's the number that should get your attention: there is currently about $328 billion sitting in donor-advised funds, waiting to be distributed. DAFs themselves aren't new. The first ones were created in the early 1900s. But over the last 10 to 15 years, their use has exploded, largely because the big national sponsors, think Fidelity Charitable, Schwab, and Vanguard, have become a default recommendation from wealth advisors and tax professionals. Opening a DAF is as easy as opening a checking account, and it lets a donor take their charitable tax deduction the moment they contribute, without having to decide right away where the money should go.

That's the opportunity. It's also the challenge. Because the tax benefit happens at the time of contribution, not at the time of distribution, a lot of that money just sits. Donors are, on average, only distributing about a quarter of what's held in DAFs each year. But in fairness to DAFs, their donors do payout at a higher rate compared private foundations that often pay out only legally required minimum of 5% of their endowment annually.

Why the Money Sits

A few structural things are working against distribution:

There's no mandatory payout requirement. Unlike foundations, DAF sponsors face no legal minimum for how much needs to move out of an account in a given year.

The incentive structure favors accumulation. Sponsors often earn fees on the assets sitting in DAFs while they're invested, so there's not always a strong internal push to get dollars out the door.

Donors genuinely forget. I hear this constantly from wealth managers: a client opens a DAF on their advisor's recommendation, gets the deduction, and then life moves on. The intent to give is real, but the follow-through often needs a nudge from somewhere.

The relationship gets outsourced. The DAF sponsor, not the donor, is technically the grantor in the eyes of the IRS. That creates real distance between your organization and the person who actually wants to support you.

That last point matters more than people realize. I've worked with organizations that receive a check from Vanguard with no donor name attached at all. No contact information, no way to say thank you, no way to build the kind of relationship that turns a one-time gift into a sustained one. Philanthropy should feel rewarding on both ends. When a donor can't see the impact of their gift, and you can't say thank you to a real person, everyone loses something.

A Word of Caution: DAFs Aren't Politically Neutral Either

It's worth naming something that came up directly in my session: DAF sponsors have internal due diligence and screening processes, and those processes can be triggered by political pressure. Earlier this year, several major national sponsors paused donations to the Southern Poverty Law Center after the organization came under investigation by the current administration. There's no real appeals process when that happens. The donor loses the ability to direct funds they've already set aside, and the organization loses access to support it was counting on.

I don't say this to scare anyone away from DAF fundraising. I say it because if your organization does work that could be politically targeted, it's worth understanding that a DAF sponsor, not your donor, is the one making that call. Staying informed about how this plays out matters more than it used to.

What You Can Actually Do About It

Here's where I want to leave you, because this is where the real opportunity lives.

Start with who you already have. Before you go looking for new DAF donors, look at your existing database. A regular, reliable giver is often a strong signal that someone has a DAF, even if they're not currently giving to you through it. Ask directly: "Do you have a donor-advised fund?" Donors aren't put off by the question.

Watch for funds that aren't in a person's name. If you've ever received a gift from something like "the Johnson Fund," that's very likely a DAF. It's worth doing a little digging to figure out the donor behind it.

Add a DAF-giving widget to your website. Tools like DAF Direct are free and make it dramatically easier for a donor to give straight from their fund without hunting down your EIN. Small friction, big difference.

Be explicit in your fiscal sponsorship arrangements. If you're fiscally sponsored, make sure your donors know exactly what needs to go in the memo line so their gift lands with the right organization, especially since your fiscal sponsor's EIN is shared across multiple projects.

Acknowledge every DAF gift like you would any other. Donors don't need a tax receipt since they already have one from the sponsor, but they absolutely still want to hear from you. A personal note or a phone call goes a long way toward turning an DAF donation into an ongoing relationship.

Ask your fiscal sponsor about their DAF process. They should have one. If they don't, that's a conversation worth having now, not in December.

Look into #HalfMyDAF. This initiative encourages donors to commit to spending down half their DAF balance annually, and it offers matching funds for participating organizations. It takes almost no effort on your end and can unlock real dollars.

Bring your major donors into the conversation. People like being treated as thought partners. Ask what their experience has been navigating DAF giving, or whether they'd be open to a #HalfMyDAF pledge. You might be surprised how receptive they are.

DAF dollars are not out of reach. They're sitting in accounts that already belong, in intent if not in legal control, to people who've decided they want to support work like yours. The organizations that build a real strategy around this, rather than waiting for a check to show up, are the ones that will unlock it.

About Our Guest Blogger: Angie Jean-Marie is the Founder & Principal of Fait La Force Strategies, a consultancy focused on helping individuals, families, and organizations navigate complex philanthropic systems and build sustainable fundraising strategies.