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It’s the second Sunday of December. A longtime member stops you in the lobby and says, “I’d like to give from my donor-advised fund this year. How do I do that?” If your team isn’t sure how to answer, that gift may go somewhere else.

Most churches rely almost entirely on Sunday giving, online tithes, and the occasional capital campaign. Yet what many church leaders don’t realize is that a growing number of faithful, high-capacity givers no longer write checks or swipe cards when they give. They give through Donor Advised Funds (DAFs), which are charitable investment accounts. 

According to the DAF Research Collaborative's Annual DAF 2025 Report, Americans held $326.45 billion in DAFs in 2024. At Fidelity Charitable, the largest DAF sponsor, religion received more grants than any other sector in 2025, and nearly half of all accounts supported at least one religious organization.

That means billions of dollars are already set aside for giving and just waiting for donors to recommend where it should go! The problem is many church giving pages still don’t mention DAFs. 

When your church understands and communicates about DAFs, you can unlock a new stream of generosity, one that’s often larger, more consistent, and more tax-efficient for your donors. You open the door to alternative year-end giving that can have a powerful impact on your ministry the following year. 

In this guide, we’ll demystify Donor Advised Funds, explain how they work, and show practical ways your church can make them a key part of your digital giving strategy.

Editor’s note: This guide is for educational purposes only and isn’t legal or tax advice. Donors should consult their financial or tax advisor before making charitable contributions.

DAF fundamentals: What every church leader needs to know

By the numbers (FY 2024, Annual DAF Report 2025):

  • DAF assets grew 27.5% to $326.45 billion.
  • Donors contributed $89.64 billion to DAFs and granted $64.89 billion to charities.
  • A record 3.56 million DAF accounts were open.

A Donor Advised Fund (DAF) is like a charitable savings account. Donors contribute money or assets into the account, receive an immediate tax deduction, and then recommend grants to their favorite ministries or nonprofits like your church over time.

The fund is managed by a sponsoring organization, such as:

Think of it as a simple way for donors to set aside money for giving without the complexity of creating a private foundation. The process follows a straightforward, three-step process:

  1. Give. The donor contributes cash, stocks, or other assets into their DAF.
  2. Grow. The funds are invested and can grow tax-free over time.
  3. Grant. The donor recommends grants to qualified charities like your church whenever they choose.

The sponsoring organization handles the administrative side: processing donations, investment management, and sending out the checks or electronic transfers to ministries. In 2025, 67% of Fidelity Charitable grants went out electronically.

How to set up a Donor Advised Fund

From a donor’s perspective, setting up a DAF is simple:‍

  1. Choose a sponsoring organization (such as Fidelity Charitable or NCF).
  2. Make an initial contribution. Minimums vary, and some sponsors, including Fidelity Charitable, have none.
  3. Start recommending grants to qualified charities over time.

It can be done online in minutes, and donors can manage everything digitally. 

Then, when a donor contributes to their DAF, they receive an immediate tax deduction in that same tax year, even if they wait to recommend a grant to your church later.

That’s a major incentive. For example, if someone contributes $25,000 in appreciated stock to their DAF in December, they can deduct that amount on that year’s taxes even if they don’t make a grant to your church until next summer.

What changed for DAF giving in 2026

The One Big Beautiful Bill Act, signed in July 2025, changed charitable deductions starting with the 2026 tax year. Your finance team should know three changes:

  • A 0.5% floor for itemizers. Donors who itemize can deduct only the charitable gifts that exceed 0.5% of their adjusted gross income each year.
  • A 35% cap for top earners. Donors in the highest bracket now get a maximum tax benefit of 35 cents per dollar, down from 37 cents.
  • A new deduction for non-itemizers. Donors who take the standard deduction can deduct up to $1,000 (single) or $2,000 (joint) in cash gifts. Gifts to DAFs don’t qualify, so for most of your members, giving directly to your church is still the simplest option.

The 0.5% floor makes "bunching" more attractive for high-capacity donors. When a donor combines several years of giving into one DAF contribution, they pay the floor once instead of every year, then grant to your church on their usual schedule. Fidelity Charitable saw its number of accounts grow 13.4% in 2025, partly because donors bunched gifts ahead of the new rules.

The power of assets: Why DAFs often mean bigger gifts

Non-cash assets open the door to generosity

The most overlooked benefit of DAFs is how easily donors can give non-cash assets like stocks, mutual funds, real estate, or cryptocurrency. In 2025, 69% of contributions to Fidelity Charitable were non-cash assets.

From the Fidelity Charitable 2026 Giving Report, in 2025 over 395,000 donors made over 3 million grant recommendations through their DAFs, totaling $18.3 billion in grants and setting a new record! The average grant size was over $5,800. 

For churches, DAFs mean fewer barriers and more opportunity to receive major gifts that might otherwise be impossible to process directly.

Yet many churches aren’t set up to accept complex gifts directly. With a DAF, the sponsor sells the asset, and the proceeds become available for grants to your church. That lets donors give from their investments, not just their checking accounts.

Appreciated stock gives donors two tax advantages:

  • A deduction for the stock’s fair market value
  • No capital gains tax on the growth

Let’s say a donor bought $10,000 of Apple stock years ago that’s now worth $40,000. Selling it outright would trigger capital gains taxes on the $30,000 profit. Contributing it to a DAF avoids that tax, so the full $40,000 is available for giving. Learn more in our guide to donating stock to charity.

The same approach works for:

Tax-free growth can increase what donors give later

Funds inside a DAF can be invested and grow tax-free. Over time, that can increase the total amount available for grants.

So when a donor puts $50,000 into a DAF today, that balance could grow to $60,000 or $70,000 in a few years. All of which can eventually support your church’s mission.

Why donors choose DAFs

Knowing why donors like DAFs helps your team talk about them with confidence. It also helps you answer common questions abou, whether church donations are tax-deductible.

Immediate tax deduction

DAFs allow donors to bundle charitable giving into a single year. For example, a business owner anticipating a large tax year might contribute $100,000 to a DAF in December. They receive the full deduction that year and then recommend $20,000 in grants to your church annually over the next five years.

Simplified recordkeeping

Instead of collecting dozens of donation receipts from different charities, DAF donors receive one single receipt from their DAF sponsor. That makes year-end tax prep simple and stress-free.

Privacy & anonymity

Some donors want to give quietly. DAFs allow for anonymous giving, meaning the donor’s name isn’t shared with the church if they prefer. The sponsoring organization simply sends a grant check on their behalf.

Legacy & family engagement

DAFs make it easy for families to pass on a legacy of generosity. Donors can name a successor advisor like a spouse or child, so the next generation continues recommending grants long after the original donor has passed.

Some families make grant decisions together as a way to teach stewardship to the next generation.

How to grow DAF giving at your church

Now that you understand what DAFs are and how they work, here’s how to turn that knowledge into growth.

1. Promote DAFs actively 

As we alluded to earlier in this post, most churches never mention DAFs. That silence costs them major gifts and donations. 

Make it easy and visible, including: 

  • Add a “Give from my Donor-Advised Fund” button or link on your online giving page. This is easy with a church engagement platform like Subsplash. 
  • Include DAF language in stewardship brochures, capital campaign packets, and your website FAQ. Even a simple line like “We accept gifts from Donor Advised Funds” can spark action.
  • Mention DAF giving in your church app, website, and wherever else donors already give online.

2. Educate your congregation 

Use your regular stewardship communications, including emails, videos, or giving series, to teach about modern giving tools like DAFs.

Pastors don’t need to turn into financial advisors. Nor do you need to dive into tax code details, but a brief mention during a generosity series can go a long way.

Focus on clarity and stories like: 

  • DAFs let you give smarter by donating appreciated assets.
  • You can give from your investments, not just your income.
  • Some families give through donor advised funds, which allow you to contribute appreciated assets tax-free. If that’s you, our finance team can help you direct a grant to the church.

Even one sentence like that normalizes DAF giving for your congregation.

When donors understand that your church can receive complex gifts easily, it changes how they think about generosity.

3. Equip your major gift or development team

If your church has a stewardship director, business administrator, or major gifts volunteer, train them to ask one simple question during donor meetings, “Do you have a Donor Advised Fund?”

Many donors already do, but have never thought to include their church.

Editor’s tip: Subsplash’s platform makes it easy for your staff to track all forms of generosity in one place so you can identify trends, track donations from all sources including DAFs, and follow up with gratitude when DAF grants come in.

4. Acknowledge DAF gifts correctly

DAF grants come from the sponsoring organization, not directly from the donor. For example, a check might arrive from “Fidelity Charitable” instead of “John and Mary Smith.”

To maintain strong relationships:

  • Record the gift as coming from the DAF sponsor.
  • Send a separate thank-you note to the donor if you know who recommended it.
  • Don't issue a tax-deductible receipt to the donor. They took the deduction when they funded their DAF.

Consistent acknowledgment builds trust and encourages future grants. Thank-you’s matter here, because DAF donors tend to be loyal. In 2025, 77% of Fidelity Charitable grants went to charities the donor had supported before.

5. Integrate DAFs into planned giving

Encourage donors to name your church as a beneficiary of their DAF when they pass.

That means when their DAF is closed, any remaining balance goes directly to your ministry. It’s one of the easiest forms of legacy giving and doesn’t require any lawyers or complex estate planning. 

6. Budget for consistency

DAFs can smooth out giving patterns. Many donors make a large one-time contribution to their DAF, then distribute smaller recurring grants throughout the year.

That means your church may see steadier giving even when attendance dips or members travel.

For instance, using Subsplash Giving, your team can track those DAF grants alongside online and recurring donations, giving your finance team better visibility into long-term trends.

Common DAF misconceptions & rules for churches

Even seasoned finance teams can misunderstand how DAFs work. Here are key clarifications to keep you compliant and confident.

1. DAF grants can’t fulfill legally binding pledges

Here’s a small but important distinction that your church must communicate clearly if you want to stay compliant. A DAF grant cannot be used to pay off a formal pledge or commitment contract. However, donors can recommend grants toward the same campaign or project, just not as a legally binding pledge fulfillment.

2. DAF grants can’t purchase goods or services

Donors can’t use a DAF to buy anything of value, like event tickets, auction items, or tuition. DAFs are strictly for charitable purposes, not exchanges.

If you host fundraising events, make sure your staff knows to keep DAF contributions separate from ticketed or benefit-related payments.

3. DAFs have administrative fees, but your church doesn't pay them

DAF sponsors charge administrative and investment fees from the donor’s account. At Fidelity Charitable, total fees typically run about 1% of the balance. Your church receives the full grant amount, with no card-processing fee.

4. The Church’s role is simple

Churches don’t need to open or manage DAFs themselves. All you need to do is: 

  1. Receive the grant check or electronic transfer.
  2. Record it properly in your accounting system.
  3. Acknowledge the donor (if known).

That’s it! You don’t handle the tax documentation or compliance burden. That’s all managed by the DAF sponsor.

Make room for DAF gifts before year-end

Donor Advised Funds are reshaping how generosity happens in the U.S. Millions of believers now give from their investment accounts, not just their wallets.

For churches willing to adapt, DAFs represent one of the most significant opportunities in modern stewardship by unlocking larger gifts, smoother giving cycles, and long-term legacy support.

Churches that welcome DAF gifts can:

  • Engage high-capacity donors already using DAFs.
  • Simplify non-cash giving.
  • Strengthen financial stability year-round.
  • Skip complex paperwork, as the sponsor handles the donor’s tax documentation and compliance

With charitable donations evolving, the tools your donors use are evolving, too. Your mission deserves to keep pace.

Subsplash’s mission is to simplify digital generosity. This includes everything from recurring tithes to non-cash gifts and Donor Advised Funds.

With powerful digital tools including websites, apps, live streaming, giving, church management, and messaging all in one unified dashboard, your church can confidently manage every stream of generosity in one place.

Ready to learn how Subsplash can help your church optimize all your giving streams, from mobile to planned gifts? [.blog-contact-cta]Book your demo here[.blog-contact-cta].