Doubling down on DAFs: 5 tips to grow donor-advised fund grants

The donor-advised fund (DAF) market presents both opportunities and challenges for most fundraisers. With assets totaling nearly $350 billion in DAF accounts, grants from DAF accounts should be part of all fundraising efforts. At the same time, fundraisers still struggle with reconciling and recording grants, which can impair donor stewardship efforts.

To shed some light on this quandary for nonprofits, here are some insights on the market opportunity and tips to increase DAF grants this year.

Sizing up the DAF market: A $25 billion opportunity gap

According to the 2025 Donor Advised Fund Research Collaborative (DAFRC) report, there were 3.56 million DAF accounts. While that’s a large and growing number, 80.7% are “processor” accounts such as workplace giving accounts, with average balances under $500. If you exclude these, there were 689,735 traditional DAF accounts at the end of 2024.

Until recently, DAF sponsors required hefty account minimums, which limited DAFs to high-net-worth donors. Those minimums have largely gone away, so a much larger population of donors can now give through DAFs.

There’s very little public data about the concentration of DAF account balances, but here are a few data points from DAFRC:

• Half of accounts have less than $50,000
• Roughly 43% of accounts held $50,000 to $1 million
• 7% of accounts held $1 million to 10 million

While some DAF sponsors report average DAF accounts ranging from $50,000 to $100,000, the median DAF account is about $25,000, according to the National Philanthropic Trust’s (NPT) 2025 DAF Report.

Per NPT, in 2024 contributions to DAFs totaled $90 billion, but DAF grants awarded totaled only $65 billion (including DAF-to-DAF transfers). This represents an opportunity gap of at least $25 billion.

How are DAF grants made?

Compared to foundations, DAFs have higher payout ratios, at 25.3% in 2024. However, these rates are skewed upward by the largest DAF accounts. If we are to increase payout rates across all account sizes, we need to encourage more DAF donors to give more often.

This brings us to the topic of how DAF grants are made. To date, DAF granting behavior has been fairly consistent, with donors taking a deliberate approach:

• Donors periodically determine how much they want to give (often to multiple nonprofits) and initiate grants to those nonprofits in their DAF portal.
• The DAF administrator reviews the grant request and, if approved, sends a check, ACH, or wire to the nonprofit.
• The donor information included with the payment often varies—some DAFs provide more detail than others.

With the introduction of DAF widgets or easy buttons, donors can now initiate grants from the nonprofit’s website. When prominently featured, they can facilitate everyday giving, responding to a crisis, or supporting a specific campaign.

What challenges do DAF accounts pose for fundraisers?

Fundraisers must also be familiar with DAF restrictions and challenges, including:

• DAFs have no payout requirement. In theory, a donor can let their DAF grow in perpetuity.
• DAF grants cannot be made to fulfill pledges, purchase tables, sponsor events, or participate in an auction.
• Errant grants: Donors sometimes select the wrong nonprofit in their DAF grant portal, and grants are sent to the wrong nonprofit.
• Some DAFs provide very little information about the donor, preventing the nonprofit from properly thanking and stewarding the donor. This can negatively impact future giving.
• When a DAF owner passes away without designating a beneficiary or passing the advisory responsibility to a family member, the DAF sponsors can direct those funds to their own foundations.

5 things nonprofits can do to attract more DAF grants

1. Expedite DAF reconciliation and stewardship. It’s important to acknowledge grants and provide a compliance-safe letter that states no benefits were provided. Timely recognition and appreciation tells the donor you truly care about their gift.
2. Meet with DAF donors and learn more about their philanthropic objectives. If there is strong alignment, ask them to include your nonprofit in their annual giving process and list it as a beneficiary of their DAF.
3. Identify potential DAF donors in your existing donor base via wealth screening tools and by asking mid-level and major donors if they have a DAF. You can also add a checkbox asking, “Do you have a DAF?” on donation forms and surveys.
4. Educate donors on other ways to support your mission: Start by displaying “Ways to Give” prominently on your website and incorporating it in all donor communications. Prioritize DAF grants among ways to give and share stories about the impact of DAF grants in funding your mission.
5. Add a DAF grant widget on your website. These buttons offer donors an easy way to take immediate action while providing nonprofits information about the donor, which supports better stewardship (see #1 above). These tools can also reduce the chances of an errant grant. Even if donors don’t take immediate action, showcasing DAF grants and inviting them to start the process communicates that DAF grants are important and may influence donors to give more, and more often.

If you want to learn more about DAFs, I’d recommend The DAF Revolution by Ted Hart, in addition to the NPT and DAFRC reports.

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