The Pentera Blog
Avoid DAF-aster: DAFs Hold a Lot of Money, but Is Your Organization Going to Get the Grants?
As donor-advised funds (DAFs) continue to grow in popularity, nonprofits should remind donors how DAFs can play an important role in their legacy giving plans.
In 2023 charitable grants from DAFs totaled nearly $55 billion—a significant increase from $28.49 billion in 2019—according to the National Philanthropic Trust. Nearly $1 out of every $10 donated to charity in the U.S. that year came from a DAF. In addition, the total funds held in DAF accounts nationwide rose 69% during the same period, growing from $148.85 billion in 2019 to $251.5 billion in 2023.
This robust growth mirrors the increasing importance of DAFs in the world of planned giving. DAFs can easily serve as vehicles for legacy giving, enabling donors to extend their charitable impact beyond their lifetimes. Most sponsoring organizations that manage DAFs offer “succession plans,” allowing donors to specify how remaining funds should be distributed if the donor passes away before the account is fully disbursed. One option for donors is to name a nonprofit as the fund’s successor, ensuring the remaining assets are directed to that organization.
If the donor does not name a successor, their “orphan DAF” may be absorbed into a general fund managed by the sponsoring organization. By proactively naming a charitable beneficiary, donors can prevent this outcome and ensure their philanthropic goals are fulfilled.
Nonprofits can help donors avoid orphan DAFs by encouraging them to establish a succession plan. Simply asking whether they have made these arrangements can open the door to a conversation about naming your organization as the designated successor. This approach benefits both your organization and your donors, who gain peace of mind knowing their legacy will continue to support the causes they care about.
DAFs represent a relatively new but rapidly expanding frontier in charitable giving. By initiating conversations about DAF succession planning and helping donors avoid orphaned funds, your organization can strengthen donor relationships and secure meaningful future support.
