Why do we need a DAF Payment Option?

Chariot’s flagship product, DAFpay, is an express checkout product built for donors that want to give easily from their Donor Advised Funds (DAFs). Nonprofits can embed it directly into their main donation form alongside other payment options, like credit card, Venmo, and PayPal—so donors can give with their DAF just as easily as with any other payment method.

Before DAFpay, donating with a DAF was typically a cumbersome and time-consuming process, requiring donors to leave the page that inspired them to give, log into their DAF provider’s portal, search for a nonprofit by their EIN (which can often be difficult to find!), and initiate a grant. DAFpay allows donors to initiate a DAF grant in just a few clicks, directly from a nonprofit’s website. 

We’re often asked why DAFpay is necessary. DAF giving has skyrocketed over the past decade even without an express checkout option. If donors are already willing to log into their DAF provider’s portal, search for a nonprofit by EIN, and initiate a gift, why change the process?

The answer is that despite this growth, there is $250B+  more that has already been set aside for giving in DAFs. DAFs can be an incredibly powerful engine for philanthropy - they encourage habitual giving, help donors organize their charitable contributions like any other financial asset, and allow giving dollars to grow with the market. But to maximize their impact, more people need to use them. That starts with making DAF giving as seamless as possible, everywhere donors give.

Embedding a DAF payment option directly into nonprofit donation forms isn’t just an upgrade, it’s a fundamental shift that makes DAF giving more accessible, frequent, and powerful. Here are the four biggest reasons why a seamless DAF payment option is essential:

1. Reduce friction in the giving process

Every additional step in the donation process creates friction, making it more likely that donors will abandon their gift. Tasks like logging into separate portals and searching for a nonprofit’s EIN add unnecessary complexity, which decreases the chance of donors completing their donations. While each hurdle may seem small, the cumulative effect leads to a drop in overall conversion rates across DAF donors.

Consider tools like Apple Pay or Venmo. Their popularity stems from their immediacy – users can purchase something the minute they’re compelled to. A DAF payment tool brings that same sense of immediacy to DAF giving.

2. Provide specificity that does not exist in DAF portals

On DAF portals, a donor’s gift will default to a nonprofit’s general fund. In order to direct their grant to a specific program or campaign, a donor needs to go back to obtain the information of the campaign in question and enter those details in the memo field. Often donors forgot to do this or do it incorrectly. 

Embedding DAFpay on donation forms eliminates this extra work for the donor and any potential for error. It allows a donor to give with their DAF to any specific campaign or donation page straight from a nonprofit’s website.

3. Optimize nonprofit gift processing

The lack of timely and specific donor data from DAF providers makes it incredibly difficult for nonprofit gift processors to track DAF gifts and subsequently steward DAF donors. Without names, emails, and real-time notifications about DAF gifts, nonprofits struggle to bolster their DAF fundraising strategies. Nonprofits encounter two major challenges regarding data supplied by DAF providers:

1. Lack of Donor Identification: DAF providers typically share a donor’s DAF “fund name,” not their full name or their email. While some fund names, like “Johnny Appleseed’s Donor Advised Fund,” offer clarity, others are vague and uninformative, like “The Pink and Purple Fund,” and make donor stewardship extremely difficult. More and more, donors are making an effort to include identifiable information in their gift. Fidelity Charitable reported that 80% of their grants in 2024 had a donor’s name and mailing address. However, without a donor’s email address, nonprofits are still left to rely solely on physical addresses to reach donors for all these gifts, delaying acknowledgement and complicating stewardship. 

2. Delayed Funds: While some DAFs have electronic payments enabled, the majority of DAFs do still send payments as checks in the mail. The complexities around fund disbursement means that some DAF gifts can take as long as 6 weeks to arrive at a nonprofit. Due to these delays, when a nonprofit receives a DAF gift, the donation was likely made over a month earlier. This means that even if a nonprofit can identify a donor based on the DAF gift, that donor has gone up to six weeks without any formal thank-you or acknowledgement from the organization they supported. 

   
   

With DAFpay, nonprofits receive an instant alert when a DAF gift is made, along with the donor’s name and email. This enables immediate acknowledgment and stewardship of DAF donors, which is instrumental to overall fundraising strategies. It also enabled DAF gifts in all fundraising campaigns, including peer-to-peer and time-sensitive drives—something previously impossible for DAF giving.

4. Promotes DAF giving 100% of the time

DAF donors are a valuable asset to nonprofits. The 2024 DAF Fundraising Report found that when donors start giving through a DAF, their contributions to organizations they’ve previously supported increases by 96% on average. The report also found that the average retention rate of a DAF donor is 15% higher than non-DAF donors in the same study period.

The 2024 DAF Donor Satisfaction Survey uncovered a critical gap in DAF giving: while donors rely on their DAFs for larger, well-planned annual contributions, they overwhelmingly turn to credit cards when responding to unexpected or urgent causes.In these situations, they either forget about their DAFs entirely, or opt for a quicker online payment method to avoid the extra steps. 

By embedding a DAF payment option directly into donation forms, nonprofits keep DAFs top of mind for donors—ensuring they can seamlessly use the funds they’ve already allocated for charity whenever inspiration strikes. And since DAF gifts are larger on average and foster a higher donor-retention rate, this means more nonprofit support overall. 

Ultimately, introducing a DAF payment option expands DAF giving by attracting new users, increasing awareness, and making DAFs more accessible for everyday philanthropy.