Demystifying DAFs: Busting 5 Common Myths and Misconceptions

You might think you know DAFs, but let’s make sure we’ve got the facts straight.

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Donor-advised funds have gained significant popularity in philanthropy, offering a flexible and strategic approach to charitable giving. However, misconceptions and myths surrounding DAFs persist, preventing potential donors and nonprofit fundraisers from fully understanding their benefits and potential impact. Read along as we break down five common myths about DAFs, shedding light on the truth.

Myth 1: DAFs are only for the ultra wealthy.

Contrary to popular belief, DAFs are not exclusive to the super wealthy. In fact, the average size of a donor-advised fund account in 2021 was $182,842 with the median size being $19,442. These numbers have been decreasing in recent years and the significantly lower median indicates that half of DAF accounts out there are actually smaller than $20k and the overall average is skewed by some extremely large outliers.

Myth 2: DAF Donors don’t donate digitally

In the digital age, online transactions have become increasingly prevalent, and philanthropy is no exception. At one leading multi-national nonprofit, they found that 40% of their DAF donors first gave to the organization with a credit card before making a gift from their DAF. That’s supported by Chariot’s own internal research canvassing 100+ DAF donors who all confirmed that they have donated with a credit card online before because it was easier than going through their DAF. These donors are likely to be digitally savvy and expect seamless digital experiences - in fact, 96% of DAF holders continue to initiate their grants digitally.

Myth 3: DAF Donors are all very, very old

While the perception persists that DAF donors are primarily older individuals, statistics tell a different story. Donors under the age of 40 represent the fastest-growing age group for DAFs. Between 2015 and 2019, there was a remarkable 93% increase in the number of accounts opened by this age group, accompanied by a 95% increase in contribution, showing the rising engagement of younger generations.

Myth 4: DAFs aren’t that popular or common

On the contrary, DAFs are experiencing an unprecedented surge in popularity and growth within the philanthropic landscape, growing 28% per year in both 2020 and 2021, making them the fastest growing vehicle in philanthropy. In fact, the number of DAF accounts, nearly 1.3 million, has nearly tripled in the last four years. DAFs are massive, especially compared to other alternative forms of giving. DAF giving is now 7x larger than the stock giving market and 652x larger than the crypto giving market.

Myth 5: DAF Givers intentionally keep money in their accounts, away from nonprofits.

A common criticism of DAFs is that they retain funds and hinder the immediate flow of financial support to nonprofits. Although DAF donors are being blamed for the money that remains stagnant each year, one primary reason is actually the difficulty of making a donation with your DAF. Billions of DAF dollars are trapped behind archaic login portals, emails, or even phone calls. It can take as many as 20 steps to submit a DAF donation, and even then you aren’t able to use those funds for all types of charitable causes (namely peer-to-peer campaigns).

Nonprofit leaders and fundraisers need to have a strong understanding of DAFs given their increasing importance to philanthropy and their organizations need to be set up to make the most of this promising source of support. Chariot offers a 3-click DAF payment option that seamlessly integrates with any donation form or fundraising platform. Make sure this important and growing base of donors can support you from their DAF as easily as possible and see how Chariot is making this easier than ever through this interactive demo.