For nonprofit development professionals, guidance about donor-advised funds has emphasized a consistent message: organizations can benefit from cultivating DAF support. Conference sessions explore implementation strategies. Sponsors offer educational resources about enhancing organizational visibility. Consulting firms provide specialized services. The underlying premise is that organizations not engaging with DAFs may miss opportunities that peers are capturing.
Does this guidance apply equally across all organizational contexts? Or do the benefits and costs of intensive DAF cultivation vary systematically based on organizational characteristics in ways that merit closer examination?
This article examines that question through analysis of both the opportunities DAF cultivation offers and the costs it imposes. The evidence suggests that while DAFs offer genuine benefits for many organizations—including some smaller nonprofits that can access new funding sources or leverage sponsor visibility—the prevailing guidance would benefit from acknowledging strategic trade-offs that vary based on organizational capacity, donor base composition, and mission characteristics.
The analysis proceeds in several parts. First, it examines DAF growth within the broader context of declining donor participation and increasing philanthropic concentration. Next, it explains why guidance emphasizes DAF opportunity so strongly. The discussion then identifies five interconnected costs that receive less systematic attention: relationship erosion, timing unpredictability, capacity mismatch, the anonymity barrier, and deferred charitable impact. Following this, a strategic assessment framework is presented integrating organizational capacity, donor base characteristics, and evolving policy considerations. Finally, implications for nonprofit strategy and sector-level understanding are synthesized.
The goal is to provide fuller cost-benefit analysis that organizations can use before committing resources to intensive DAF pursuit. For some nonprofits—including those that identify specific DAF funding opportunities or sponsor relationship benefits—DAF cultivation represents sound strategy. For others, alternative approaches may better serve organizational interests. Strategic decision-making requires honest assessment of organizational circumstances.