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Most guides to donor-advised funds are written for donors. This one is for the charity on the receiving end. It covers how the money moves, what you can and can't do with it, and the few steps that turn "I'll give from my DAF" into a gift in your bank account.
A donor-advised fund (DAF) is a giving account held at a sponsoring public charity. Sponsors include national charities tied to investment firms (such as Fidelity Charitable or DAFgiving360), local community foundations, and single-issue charities.
The donor puts money, stock or other assets into the account and takes the tax deduction that year, as IRS Publication 526 explains. Later, the donor recommends grants to the charities they want to support. The sponsor legally controls the money, but in practice it follows the donor's recommendation.
For a small nonprofit, the key point is this: DAF money is already set aside for charity. The donor doesn't have to decide whether to give, only where.
A DAF gift can start in two places: in the donor's fund account, or on your donation form if it accepts DAF gifts. Either way, it follows four steps:
The timing is set by the sponsor, not the donor. A donor may recommend a grant in early December, and the check may land weeks later.
For a small nonprofit: you can't speed up the sponsor, but you can make sure nothing on your end slows down the recommendation. That means correct legal details and someone who watches for the money. On Zeffy, every DAF gift started on your form shows as Due in your payments list until you mark it paid, so you can see what's still on its way.
Two rules matter most for the charity.
A DAF grant can't buy the donor a benefit. Under federal rules for DAFs (IRC 4967), a grant can't pay for anything that gives the donor more than an incidental benefit. That rules out event tickets, auction items, raffle tickets and gala dinners. A membership fee is the narrow exception. A DAF can pay for it only if the fee is fully tax-deductible and the donor turns down every membership benefit, per the National Philanthropic Trust's grantmaking rules.
You don't send a tax receipt for a DAF grant. The donor already got their deduction when they put money into the fund. The sponsor gave them the receipt then. A second receipt from you would suggest a second deduction.
| Can a DAF grant pay for… | Yes / No |
|---|---|
| A general donation | Yes |
| A gift to a specific campaign or program | Yes |
| A gift in honor or in memory of someone | Yes |
| Gala or event tickets | No |
| Auction items | No |
| Raffle tickets | No |
| A membership with perks | No |
| A membership fee where the donor declines every benefit | Yes, if the fee is fully tax-deductible |
For a small nonprofit: route DAF gifts to your donation forms only. If a donor wants to attend your gala, the ticket has to come from their own pocket. On Zeffy, the DAF option only appears on donation forms and peer-to-peer campaigns, never on tickets, auctions or raffles, so donors can't pick it in the wrong place.
What works in your favor:
What's out of your hands:
The National Philanthropic Trust publishes an annual DAF Report that tracks contributions to DAFs and grants from them, if you want the national picture.
For a small nonprofit: DAF gifts are worth a few hours of setup. They aren't worth a separate plan apart from your major-donor and year-end work.
The DAF gifts that never arrive are usually the ones that were too hard to send. The EIN wasn't on the donate page, the donor copied something wrong, or no one followed up. Here's how to remove that friction:
For a small nonprofit: steps 1 and 2 take an afternoon. Step 4 is where most DAF gifts get lost, so give it a clear owner.
When to ask. Ask during year-end giving and around Giving Tuesday, which falls on December 1, 2026. That's when donors are already reviewing their fund accounts.
Who to ask. DAF gifts often come from people who already give to you in other ways. Start with donors who give large gifts or give stock. Your major donor cultivation list and anyone who has made stock donations are the natural place to begin. In one interview we ran, a nonprofit leader suspected their organization could bring in more just by asking donors whether they give through a DAF. The gap was awareness, not interest.
How to ask. Add one line to your appeals and your donate page, such as: "Have a donor-advised fund? You can give from it right here." Don't run a separate DAF campaign. To the donor, a DAF is just another way to pay.
For a small nonprofit: one sentence in your year-end letter and one option on your form will do more than a dedicated DAF push.
Thank the donor personally (if you know who they are). Write a real thank-you note that names what their gift will do. Keep it from reading like a tax receipt: don't state a deductible amount or say that no goods or services were provided. Our guide to the donor acknowledgment letter covers tone and structure.
Acknowledge the sponsor's grant. A short confirmation that you received the grant is enough. Some sponsors send their own instructions with the check.
Record the gift on the person, not just the fund. The check says the name of the fund. But as one development lead put it in an interview, the donor is often giving because their child is in the program. If every DAF check goes under one "fund" account, your giving history stops telling the truth. Your biggest donors look like strangers. When you know who recommended the grant, record it on that person's profile. That way you can keep a full giving history for each donor in Zeffy's free donor CRM, next to everything else they've given.
A grant professional we spoke with put it simply: DAFs are less like grant applications and more like major donor management. Treat the person behind the grant the way you'd treat any major donor.
For a small nonprofit: the sponsor's name is on the check, but the relationship is with the person. Record it that way.
Zeffy is the free all-in-one fundraising platform for nonprofits, with a donor CRM built in. US nonprofits can accept DAF gifts on your donation form, and the option works on peer-to-peer campaigns too.
Here's how it works:
There are no fees on DAF gifts, and donors aren't asked for a tip on them. That matches the rest of Zeffy: no platform fee, no transaction fee, no credit card fee. Ever. Zeffy doesn't send a tax receipt for a DAF gift, because the fund already gave the donor one. The option is for one-time gifts on donation forms and peer-to-peer campaigns. It doesn't appear on tickets, auctions, raffles, memberships with perks or store items, which keeps you inside the rules above.
For a small nonprofit: this covers steps 2 and 4 of the friction list in one place, so a "To confirm" gift doesn't get forgotten in someone's inbox.
Both can fund your nonprofit, but they work differently from your side. A private foundation must pay out 5% of its assets each year and usually has its own application process. A DAF follows the donor's recommendation, with no application and no required payout.
For a small nonprofit: approach a family foundation like a funder with a process. Approach a DAF donor like a major donor, because that's who they are.
Year-end is when DAF recommendations peak. Before then, check that your donate page shows your legal name, EIN and address. Add a DAF option to your form, and decide who on your team follows each gift until it's paid.
Set up your free donation form before year-end and let donors give from their DAF in a few clicks
There's no legal cap on how much a donor can put into a DAF. What's limited is how much they can deduct in a given year, and that depends on the type of asset they give. The comparison table above shows the general limits, and IRS Publication 526 has the details. Each sponsor also sets its own minimum to open an account.
donor-designated fund supports one specific charity named when the fund is set up. A donor-advised fund lets the donor recommend grants to many different charities over time.
There's no legal deadline for paying money out of a DAF. Some sponsors set their own rules. For example, under Fidelity Charitable's program guidelines, if an account makes no grants for two years, Fidelity Charitable may make grants from it at its own discretion.
Yes. With Zeffy, US nonprofits can add a DAF option to their donation forms and peer-to-peer campaigns for free, with no fees. The donor picks their fund and sends the grant request, and you track the gift until it arrives.
No. The donor got their deduction, and their receipt, when they put money into the fund. Send a personal thank-you instead, written so it doesn't read as a tax receipt.
No. A DAF grant can't give the donor a benefit, so it can't pay for event tickets, auction items, raffle tickets or gala dinners. A membership fee is allowed only if the fee is fully tax-deductible and the donor declines every benefit.
The donor can ask their sponsor to keep the grant anonymous. In that case the money arrives with the sponsor's name only, and you can't thank the donor directly.
That's set by the sponsor, not the donor or your nonprofit. It varies from fund to fund. Track each recommended gift until the money lands, and follow up kindly if a promised gift seems overdue.
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