The DAF Revolution: Why Donor-Advised Funds Are Reshaping Philanthropy

Donor-advised funds (DAFs) have quietly become one of the most powerful forces in modern philanthropy. In the latest episode of the Nonprofit Counsel Podcast, host May Harris sits down with Ted Hart—prolific author and longtime nonprofit leader—to explore why DAFs are growing so rapidly, what that growth means for donors and nonprofits, and how the sector should be thinking about the future.

Ted’s newest book, The DAF Revolution: Making a Difference in Our Modern World, is his eighth—and arguably his most timely. As the fastest-growing philanthropic vehicle in history, donor-advised funds now hold more than $250 billion in charitable assets. But the real story isn’t just about scale. It’s about how DAFs meet donors where they are and change how generosity shows up in the world.

From Lifelong Service to a New Philanthropic Tool

Ted’s journey into the nonprofit sector began before he even graduated from college. A board member took a chance on him, offering an early role in a charity—and he never looked back. What hooked him wasn’t just the work itself, but the idea that nonprofits allow people to contribute to causes they care deeply about, even when their day-to-day lives don’t permit full-time service.

That same theme—making generosity accessible—runs through Ted’s work on donor-advised funds. Much like nonprofits themselves, DAFs create a bridge between good intentions and meaningful action.

Why DAFs Are Taking Off

At their core, donor-advised funds separate when someone gives from when they decide where the money goes. A donor might contribute during a high-income year, after selling a business, or near the end of the calendar year when tax planning is top of mind—without having to rush into grantmaking decisions.

That flexibility matters. It’s one reason DAFs reached their first $100 billion in assets in just 30 years, while private foundations took more than a century to do the same.

DAFs also simplify giving. The sponsoring organization—always a 501(c)(3)—handles compliance, reporting, and investment oversight. For donors who want to focus on impact rather than forming and administrating a separate entity, that’s a compelling tradeoff.

Not All DAFs Are the Same

One of the most helpful insights from the conversation is that donor-advised funds aren’t monolithic. Ted outlines three broad categories:

• National DAF sponsors, like Fidelity Charitable, which offer efficiency and scale.

• Community foundations, which anchor giving locally and often bring deep knowledge of regional needs.

• Mission-based or single-issue DAFs, including religious or values-driven sponsors that align grantmaking with a specific lens.

Donors aren’t locked into one path forever. They can move between DAFs, or even advise grants from one fund to another, as their priorities evolve.

A Growing Alternative to Private Foundations

For families who once formed private foundations because there were few other structured options, DAFs are increasingly attractive. Smaller foundations, in particular, are finding that transferring assets into a donor-advised fund allows them to focus on being philanthropists—not compliance managers.

The contrast in payout behavior is striking. While private foundations are required to distribute 5% of assets annually, many foundations treat that rule as a ceiling rather than a floor. There are no restrictions on giving more, but many trustees of private foundations feel that it is their fiduciary duty to remain in the 5% range. In contrast, according to Ted, DAFs regularly distribute 15–25% each year. It seems that, without a mandated minimum, donors tend to give more, not less.

As Ted puts it, “People give at higher rates when they’re not told how to give.”

Addressing the Criticism Head-On

DAFs aren’t without critics. Concerns about warehousing charitable dollars and delayed giving have been front and center in policy discussions. Ted doesn’t shy away from those critiques in his book. He interviewed more than 120 experts—including some of the sector’s most vocal skeptics—and acknowledges that many criticisms were valid a decade ago.

What’s changed? Most DAF sponsors now have inactivity policies, grantmaking standards, and proactive outreach to ensure funds don’t sit untouched indefinitely. While regulation may still lag innovation, the ecosystem has matured significantly.

What Nonprofits Need to Know

Perhaps the most practical takeaway is Ted’s message to nonprofits: donor-advised funds aren’t a passive revenue stream. Hope is not a strategy.

In The DAF Revolution, Ted dedicates an entire chapter to nonprofit-specific strategies—ten of them—ranging from major gift relationships to internal readiness. He also includes case studies of organizations that have successfully increased DAF giving by being intentional and informed.

With DAF assets continuing to grow, nonprofits that invest in a thoughtful DAF strategy now may find themselves far better positioned in the years ahead.

Looking to the Future

In the book’s final chapter, Ted turns to the next generation. Across interviews with philanthropic leaders, one theme rose above the rest: engaging children and grandchildren in values-based giving. Donor-advised funds, with their ability to name successor advisors and involve families over time, are uniquely suited to that work.

For a sector thinking seriously about sustainability and stewardship, that may be the most revolutionary promise of all.