In recent years, DAFs have experienced a remarkable rise in popularity. According to the National Philanthropic Trust, the amount of donor advised funds opened by Americans has grown 9x in the past 10 years. And it’s not just the number of funds that’s grown — the volume of grants from DAFs has also seen a substantial rise. While DAF grants represented just 7% of charitable contributions in 2017, they accounted for 17% in 2022 – that’s $52 billion dollars directed from DAFs to nonprofits (also per NPT).
Read more about why donors use DAFs
This article will cover:
The security benefits that DAF giving presents relative to other ways to give online
The new risks that DAF giving introduces
They ways that DAFpay addresses these risks
Additional steps nonprofits and donors can take to protect themselves
As DAF usage continues to grow, all stakeholders – DAF providers, nonprofits, and donors alike—should be intentional about making the most of this giving tool. While DAFs do offer some security improvements compared with other donation methods, it’s important that nonprofits and donors are aware of the most common risks that come with DAF giving and most effective ways to avoid them.
According to Giving Compass, DAF donors tend to be highly conscientious, with 97% of DAF donors conducting due diligence before giving. They will therefore value the additional information that ensures their gift is made securely.
Security Benefits of DAF Giving
There’s been increasing focus on the risks around using credit cards or “peer-to-peer” payment tools like Venmo and Cashapp in general, and concerns about fraudulent charity schemes. In 2024 alone, 60% of credit card holders in the U.S. fell victim to fraud (Security.Org). And only 7% of those instances were due to lost credit cards, the rest occurred because individuals remotely accessed personal data and account information. The amount of unauthorized purchases attributed to credit card fraud has surpassed $5 billion for the 2024 year.
DAFs mitigate online giving risks in two primary ways:
DAF providers add a layer of diligence, ensuring donations are sent to IRS-compliant organizations – in other words – real nonprofits.
Whether a DAF account holder is going through their provider portal or logging in using DAFpay, a 3-click DAF payment option, they are securely accessing and taking actions in their account. With DAFpay, DAF account details are fully encrypted in transit and never stored.
The risks that DAF giving does present are instead related to funds going to unintended recipients, getting lost, or getting delayed.
Top 3 Risks of DAF Giving—and How to Minimize Them
Risk 1: Unintended Recipients
When DAF donors login to their DAF portal, they always have to look up the organization they want to support. However, most DAF portals will only make an organization searchable by its legal name or EIN (tax ID number). This can present a lot of donor confusion in three common instances:
The organization they want to support has a different legal name than the marketing name that donors are searching.
There are more than 1.5 million nonprofits in the US and many of them have very similar names.
Many organizations technically operate across multiple EINs and it can be difficult to tell which entity to select.
This confusion can result in gifts not getting completed or being unintentionally sent to the wrong organization.
How DAFpay addresses this risk: The Correct Recipient is Pre-Selected
Since DAFpay lets a donor use their DAF on a specific organization’s donation form, the right EIN is already pre-selected when they check out. They don’t need to go to their portal separately and they don’t need to look anything up, so it eliminates the risk of picking the wrong organization - or giving up and not completing your gift.
DAFpay eliminates the risk of
Other ways to help:
Anytime you’re giving through a DAF portal, confirm the benefitting organization’s Tax ID number (aka their EIN) and search by it instead of the name, to avoid sending gifts to unintended organizations.
Risk 2: Lost and Delayed Gifts
Mailed checks, the most common method for DAF disbursement, often encounter issues that can delay or disrupt the donation process. Common problems include errors in recipient names or addresses, which can lead to checks being returned or misdelivered. Checks are also vulnerable to loss, damage or even fraud when in transit – in 2023, the AARP even reported that banks and USPS discourage folks from mailing checks altogether due to this security concern. Additionally, processing times for paper checks are much longer than digital transactions, which slows down the availability of funds to nonprofits in need. These factors make checks a less reliable method for time-sensitive contributions – especially since the nonprofit doesn’t know anything about the gift until it arrives.
How DAFpay addresses this risk: Immediate Notification
When a gift is made through DAFpay, the benefiting nonprofit is alerted immediately, so they know to expect a gift and can initiate prompt outreach if issues arise. In the case that something goes wrong with check delivery, organizations can address it vs. potentially never even realizing a donation was made.
Other ways to help:
Notify the nonprofit when making a DAF gift through your portal, so they are aware that payment should be on its way and can troubleshoot if it is lost or delayed.
Risk 3: Lack of Proper Attribution
Most DAF systems are not set up to easily share a DAF account holder’s name and email with a nonprofit. When giving through their DAF portal, a donor would have to go the extra mile to include their full name and email in the memo field for the receiving nonprofit to have certainty on which donor recommended the gift and how to contact them. Without good data, nonprofit record keeping and stewardship for DAF gifts is extremely lacking. This means that these supporters often don’t get the acknowledgement or recognition they expect for certain levels of support, leaving them feeling underappreciated and disconnected.
How DAFpay addresses this risk: Seamless Donor-Nonprofit Connection
Donors are instantly linked to their gifts, avoiding back-and-forths that might otherwise be necessary to determine a specific donor and ensuring they are properly acknowledged.
These back-and-forth exchanges can be tedious, unproductive, and even awkward, especially in the situation where a nonprofit needs to ask multiple donors if they’ve made a recent gift.
Other ways to help:
When submitting DAF gifts through your DAF portal, include detailed information in the memo field to help the nonprofit recognize your donation.
This information might include a specific campaign, a full name, and/or an email.
DAFs are shaping the future of philanthropy—driving more donations and fostering deeper donor engagement. According to the 2024 DAF Fundraising Report, when donors switch to giving via DAFs, their annual support of an organization increases by an impressive 96%.
With the rapid rise in DAF giving, everyone in the sector needs to increase the focus on making the DAF giving experience more seamless, secure and efficient. All of us in the nonprofit sector – organizations, fundraising platforms, and donors alike – should focus on adopting best practices with DAF giving. These best practices include enabling DAFpay in all online donation experiences, and taking steps to ensure that a DAF gift is easy to track.
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