Donor-Advised Funds Are Not the Enemy—But They're Not the Whole Answer Either

Imagine you're a development director at a mid-sized food bank. It's December, and you've just seen the GivingTuesday numbers: $3.6 billion raised nationwide, a record (GivingTuesday Data Commons). You're excited, but then you check your donor database. Your average gift is up, but the number of individual donors is flat—maybe even down. You've heard about donor-advised funds (DAFs), and a few of your larger donors have started giving through them. But you can't help wondering: are DAFs helping you or just concentrating your donor base? This is the tension we face every day, and it's time we had an honest conversation about it.

The DAF Boom: A Blessing or a Curse?

Let's start with the obvious: DAFs are growing like crazy. Total assets hit $327.87 billion in FY2024, up 27.9% from the previous year (DAF Research Collaborative). Contributions to DAFs soared to $90.57 billion, and grants out of them reached $64.60 billion. That's real money flowing to charities. But here's the thing: that money is highly concentrated. The average DAF account is $91,300, and the top 50 donors alone gave $16.2 billion in 2024 (Giving USA 2025). While that's great for the charities that receive those grants, it's a double-edged sword. If we rely too heavily on DAFs, we're building our fundraising on a foundation of a few wealthy donors—and that's risky.

The Real Crisis: Fewer Households Giving

Here's the number that keeps me up at night: the share of households that donate has fallen from 65% in 2008 to about 49.6% by 2018 (NPTrust). That's a massive drop. And while total giving hit a record $592.50 billion in 2024 (Giving USA 2025), that's driven by the wealthy. The average American household is giving less, or not at all. If we don't reverse this trend, we're going to end up with a charity sector that serves the interests of the rich and ignores everyone else. That's not the charity I signed up for.

Why DAFs Matter (and Why They Don't)

DAFs are a tool, not a solution. They're great for donors who want to bunch their giving for tax benefits, and they can provide a steady stream of grants. But they don't solve the participation problem. In fact, they might make it worse. The IRS allows cash contributions to public charities to be deducted up to 60% of adjusted gross income (IRS), which is generous, but only if you itemize. And since the standard deduction went up, fewer people itemize. So the tax incentive is skewed toward the wealthy. DAFs are just another way for the wealthy to optimize their giving—and that's fine—but we can't pretend they're going to bring back the middle-class donor.

What Actually Works: Empathy and Impact

So what does work? Research from a meta-analysis shows that empathy is a robust predictor of giving (Nature Communications). When we can make donors feel the impact of their gift, they give more. In fact, showing donors the consequences of their previous donations increased subsequent giving by 14% (Nature Communications). That's not a huge number, but it's real. And it's something we can do in our own fundraising. Instead of just asking for money, we need to tell stories that connect donors to the people they're helping. That's what brings people back.

The Counterargument: DAFs Are Efficient

I can hear the counterargument now: "But DAFs are efficient. They let donors give more, and they're the future of philanthropy." And it's true that DAFs are growing, and they're a convenient way for donors to manage their giving. But efficiency isn't the same as equity. And the data shows that DAFs are not increasing the number of donors—they're just concentrating the dollars. The payout rate from DAFs is rising, which is good, but it's still only 25.2% (DAF Research Collaborative). That means a lot of money is sitting in DAFs, not going to charities. And while that's the donor's prerogative, it's not something we should celebrate.

What We Should Do Instead

Here's my recommendation: stop obsessing over DAFs and start focusing on the donor base. We need to make giving a habit for everyone, not just the wealthy. That means we need to make it easy for people to give, and we need to show them the impact. We also need to recognize that giving isn't just about money. Volunteering is on the rise—75.7 million Americans volunteered in 2023, and the rate is rebounding (AmeriCorps & U.S. Census Bureau). That's a huge opportunity. If we can convert volunteers into donors, we can grow our base.

And let's not forget the next generation. Millennials and Gen Z donors are planning to give more in the next 12 months (Vanguard Charitable). They're also more likely to use DAFs—42% of giving Millennials used one in the past year (Financial Planning). So DAFs are going to be part of the mix. But if we want to build a sustainable charity sector, we need to engage them in other ways, too. That means meeting them where they are, whether that's through social media or through virtual volunteering, which is a new and growing trend (AmeriCorps & U.S. Census Bureau).

Quick tip: Don't let DAF donors become invisible. Ask if they'd be willing to meet with you or share their story. Personal connections turn transactional giving into lasting relationships.

The most important thing to remember is this: DAFs are a tool, not a strategy. If we want to build a charity sector that serves everyone, we need to focus on growing the number of donors, not just the size of gifts. That means investing in empathy, showing impact, and welcoming the next generation. That's the future of charity.

Sources

• Giving USA 2025 - https://givingusa.org/giving-usa-2025-u-s-charitable-giving-grew-to-592-50-billion-in-2024-lifted-by-stock-market-gains/
• Nature Communications (2026) - https://link.springer.com/article/10.1038/s41467-026-70230-8
• NPTrust - https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/
• IRS - https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions
• DAF Research Collaborative - https://www.dafresearchcollaborative.org/research/annual-daf-report
• AmeriCorps & U.S. Census Bureau - https://www.census.gov/library/stories/2024/11/civic-engagement-and-volunteerism.html