Ultimate guide to Donor-advided fund (DAF) payments for Nonprofits

Look, if you’re not actively going after donor-advised fund payments, you’re probably leaving some serious money on the table. There’s over $230 billion in assets just sitting there, available for grants (Funraise). And here’s the thing: DAFs are one of the fastest-growing funding sources for US nonprofits right now. Yet so many small teams struggle to tap into this because they don’t quite get how DAF payments work or they assume asking is complicated.

We figured we should do a li’l deep dive into practical strategies that’ll help your nonprofit capture DAF donations without adding more chaos to your already-full plate. In our experience, once you understand the basics and set up the right systems, this stuff practically runs itself.

What Are Donor-Advised Funds and Why Should You Care?

A donor-advised fund is basically a charitable investment account where donors contribute assets, snag an immediate tax deduction, and later recommend grants to nonprofits like yours (Funraise). The sponsoring organization (think Fidelity Charitable or Schwab Charitable) handles all the investment management and distribution logistics, making DAFs way simpler than private foundations.

Here’s what makes them particularly attractive: funds grow tax-free, meaning that initial $10,000 contribution could become a $15,000 grant to your organization as the account appreciates (Funraise). Better yet, most DAF grants come as unrestricted gifts, giving you flexibility to use funds where they’re needed most.

The numbers tell a pretty compelling story. DAF donors often triple their gift amounts compared to direct giving (Funraise), turning modest supporters into major funders. In FY2025 alone, DAFgiving360 donors granted $8.9 billion (a 34% increase year-over-year) to 155,000 charities via 1.4 million grants (DAFgiving360). That’s roughly $24 million in grants distributed daily.

Protip: Don’t wait for DAF donors to find you. Survey your current donor base with a simple question like “Do you have a donor-advised fund?” Organizations that ask directly receive DAF gifts 87% of the time versus 42% for those who don’t ask (NLA1). Huge difference there.

How DAF Payments Actually Work

Understanding the payment mechanics helps you set proper expectations and streamline processing. When a donor recommends a grant through their DAF sponsor, the sponsor verifies your 501(c)(3) status and issues payment, typically via check or wire transfer within days to weeks (Funraise).

Critical detail: You don’t issue a new tax receipt for DAF payments. Donors already claimed their deduction when they contributed to the fund, so your acknowledgment should note the gift is non-deductible for IRS compliance purposes (Funraise).

While payments are technically grants from the sponsoring organization, sponsors follow donor recommendations over 99% of the time (Fidelity Charitable). Modern platforms like Funraise have eliminated traditional friction through DAFpay integration, where donors select their provider on your donation form, log in, and recommend a grant in just three clicks (Funraise).

Common Challenges We See Daily

Before nonprofits switch to Funraise or upgrade their DAF strategy, we regularly encounter these scenarios:

The Manual Matcher: A development director spending 3-4 hours weekly cross-referencing checks from “Fidelity Charitable Gift Fund” against her donor database, trying to guess which supporter sent the gift. Without donor information automatically captured, she’s stuck sending generic thank-you letters or making awkward detective phone calls.

The Tech Barrier: An organization with a legacy donation form that doesn’t mention DAFs at all. Their wealthiest donor has $80,000 sitting in a Schwab account but donates just $5,000 annually because the multi-step manual process feels too complicated compared to the one-click credit card option.

The Missed Opportunity: A small team that received one DAF gift last year but never followed up strategically, unaware that DAF donor retention is 13% higher than non-DAF donors, with organizations seeing median revenue growth of +112% from 2020-2024 after adopting DAF-friendly practices (Funraise).

Sound familiar? You’re not alone.

AI Prompt: Personalize Your DAF Outreach Strategy

Ready to create targeted DAF communications? Copy and paste this prompt into ChatGPT, Claude, Perplexity, or your preferred AI assistant:

I run a nonprofit focused on [YOUR CAUSE AREA]. Our typical donor is [DONOR DEMOGRAPHIC/PROFILE]. We want to encourage donor-advised fund (DAF) giving. Create three different email subject lines and opening paragraphs for a DAF campaign targeting [SPECIFIC DONOR SEGMENT], emphasizing [KEY IMPACT METRIC OR STORY]. Make the tone [DESIRED TONE: warm/professional/urgent] and include a clear call-to-action about our simplified 3-click DAF donation process.

While AI tools can jumpstart your strategy, solutions like Funraise embed AI components directly where you’re already working, providing full operational context without switching between platforms. This saves precious time and keeps your donor data secure in one system.

Top DAF Providers: Know Where Your Donors Bank

Not all DAF sponsors are created equal. Understanding the major players helps you tailor your approach and set up the right integrations.

Fidelity Charitable works well for broad-appeal organizations, while Schwab Charitable excels for nonprofits seeking recurring, year-round support. If your mission aligns with faith-based values, National Christian Foundation donors may be your sweet spot.

Protip: Time major appeals around DAF Day (October 9) when sponsors actively promote giving. Funraise provides ready-made templates for email and social posts highlighting the ease of 3-click donations (Funraise).

Five Strategies to Attract DAF Donors Without Extra Work

1. Upgrade Your Donation Technology

Legacy forms actively lose you DAF gifts. Platforms with built-in DAF integrations like Funraise provide instant provider links and automatic donor matching, eliminating manual detective work (Funraise).

2. Target the Right Prospects

Focus on high-net-worth donors (average age 55+), individuals with stock holdings, or those approaching retirement who are frustrated with paperwork. The average DAF account holds $141,000 (Funraise), making these prospects worth cultivating.

3. Enable Recurring Giving Options

Since 38% of Schwab grants are scheduled as recurring donations (DAFgiving360), pitch the ongoing impact of monthly or quarterly grants rather than one-time asks.

4. Accept Non-Cash Assets

Work with DAF sponsors to accept securities and other assets, since 66% of Fidelity contributions are non-cash (NLA1). This opens doors to significantly larger gifts.

5. Build Relationships with Community Foundations

Local community foundations often manage DAFs and actively seek grant opportunities. One conversation can unlock access to dozens of potential donors (NLA1).

Stewardship That Keeps DAF Donors Coming Back

Proper acknowledgment matters for compliance and relationship building. Thank the sponsor first (the check issuer), then thank the individual donor if their information was shared, which happens in 90%+ of cases (Funraise).

Your acknowledgment letter should clearly state the gift is non-deductible since the donor already claimed their tax benefit at contribution. Focus instead on impact: send quarterly updates showing how unrestricted gifts (which represent 70%+ of DAF grants) made a difference (DAFgiving360).

Here’s an unconventional approach that drives results: Create a public “DAF Honor Wall” on your website thanking anonymous sponsors and top providers. This social proof generates positive FOMO and encourages repeat grants from competitive donors.

Organizations that track DAF gifts separately in their CRM and provide personalized stewardship see remarkable loyalty. When DAF donors switch their giving to a new organization, they increase donations by a median of $110, with 67% boosting their annual giving (Candid).

What’s Next: DAF Trends for 2025 and Beyond

The DAF landscape continues evolving rapidly. Recurring grants are rising to 38-40% of total DAF giving (CCS Fundraising), while non-cash contributions surge to 63% at some sponsors (DAFgiving360). Total DAF assets are projected to hit $68 billion in grants for 2025, outpacing private foundations (RSM US).

Smart nonprofits are adapting by integrating DAFs into major gift pipelines, treating them as “charitable wallets” during planned giving conversations rather than isolated transactions (Funraise). With 78% of Schwab assets being advisor-linked (DAFgiving360), building relationships with financial advisors who guide clients becomes increasingly strategic.

Getting Started Today

You don’t need a massive development team to tap into DAF giving. Start by adding a simple question to your donation form: “Would you like to donate through your donor-advised fund?” Then embed a widget (Funraise makes this seamless) that guides donors to their provider’s portal.

Test the waters for free with platforms like Funraise.org, which offers both a no-commitment free tier for smaller organizations and premium features for those ready to scale. The DAF integration works right out of the box, meaning you could start capturing larger gifts within days, not months.

That $230 billion sitting in DAF accounts won’t donate itself. But with the right strategy and tools, your nonprofit can claim its share of this explosive funding source while actually reducing workload for your small team. And honestly? That sounds like a win-win to us.