Using DAFs for Greater Impact
A donor-advised fund (DAF) can be more than a charitable giving account. With the right strategy, it can be a flexible vehicle for grantmaking, impact investing, long-term capital stewardship, and collaborative philanthropy.
1. What is a DAF?
A donor-advised fund is a charitable giving vehicle that allows individuals, families, or organizations to make a tax-deductible contribution to a sponsoring organization and then recommend how those funds are deployed over time. This makes DAFs a useful tool for donors who want to align their capital with values and mission while maintaining flexibility. DAFs are powerful vehicles for: Donors and families looking to move resources Companies and start-ups looking to direct profits to impact and manage tax needs. Private Foundations looking for affordable and effective vehicles to do impact investing, or manage collaborative giving and impact investing.
2. Our Recommendations
A. Set up a DAF at your Community Foundation For donors who want a locally rooted strategy, a community foundation DAF can be a strong option. Partnering with other leaders who know our communities best is a powerful path to collaborative impact. This approach may work well for donors who want to: Keep giving connected to a specific geography or community Build relationships with local institutions Support local nonprofits and community priorities Create a flexible charitable vehicle with community visibility and trust Not all community foundations operate with the same values, governance structures, or relationship to community power. When evaluating a community foundation partner, we encourage consideration of: commitment to participatory practices relationships with grassroots organizations support for movement-led work willingness to deploy capital beyond conventional grantmaking racial, economic, and ecological justice orientation investment in shared governance and community accountability B. Set up an Impact DAF For donors who want to go beyond traditional grantmaking, we recommend establishing an Impact DAF. At Movement Strategy Center (MSC), Full Spectrum helped create a custom Impact DAF program designed to support a broader set of charitable capital strategies. Through this model, donors may be able to recommend: Grants Recoverable grants Loans Equity investments Other organizations offering strong DAF and impact-investing-related options include ImpactAsset Common Counsel Foundation. The DAF Commons is a new and helpful guide to identifying a range of additional Impact-Focused DAF providers to meet your needs.
3. Innovative Ways to Use DAFs
Full Spectrum Advisors and Kinflow can support you to use your impact DAFs in many innovative ways that align on your goals and strategy: a) For impact investing A DAF can be used to move charitable dollars into investments that align with your values and support social impact, rather than limiting all activity to traditional grantmaking. b) As an "Endowment-like" Vehicle A DAF can function as an endowment-like charitable reserve, allowing donors or families to set aside capital, grow it over time, and deploy it strategically when opportunities arise. DAFs can also serve as endowments for communities and organizations to help catalyze financial stability and self-determination. c) For collaborative grantmaking & impact investing A DAF can support shared giving strategies, including: Impact Investing Giving Circles Donor and Giving circles Collaborative grantmaking funds This can be especially useful for families, peer networks, or communities that want to make decisions collectively and pool resources for greater impact. DAFs are the ideal learning environment for those new to impact investing and collaborative or participatory grantmaking. d) For Global Giving and Impact Investing As a part of our Full Spectrum Globals strategy, we partner with the MSC DAF program to support US-based donors and impact investors and move resources to global change makers and solutions. e) Globally Distributed Vehicles for Asset Impact Allocations For Capital Stewards operating from multiple countries or moving resources to impact solutions around the world, creating a US-based philanthropic vehicle through Impact DAF is an effective way for both capital and community stewards to establish a vehicle to direct impact resources from the US. f) Accessing Investment Opportunities Through Blueprint Full Spectrum Advisors partners with Blueprint Collaborative, an integrated capital platform, to source and present vetted investment opportunities for DAF holders ready to deploy capital for impact. Blueprint coordinates blended capital across a network of community stewards and aligned funds and surfaces opportunities that match your values, geography, and impact thesis. Through this partnership, DAF holders can: Browse curated opportunities vetted for movement alignment, financial readiness, and community rootedness Participate in pooled deals alongside other donors and impact investors in the Full Spectrum Impact Fund Access integrated capital structures and blended finance tools Receive transparent reporting on deployment, performance, and community impact
4. Move Your Money and Advocate for Reform
More than $326 billion is sitting in donor-advised funds (DAFs). Join the movement to get these resources moving by becoming a part of #HalfMyDAF and support efforts for DAF policy reform to incentivize DAF providers to require and increase payouts to ensure resources don't simply sit accumulating in Big Bank accounts but get into the hands of changemakers who the solutions our communities and world need.
5. I've heard DAFs are problematic, why don't you agree?
A DAF is just a tool. Like any tool, it can be used both for good and bad outcomes. There are problems with DAF policy that can lead to secrecy, facilitate hoarding, and can amplify the problems we aim to help solve (which is why reform advocacy is good). These downsides are not inherent to DAFs, and DAF funders and sponsors can make choices that avoid the behaviors that are the target of valid critiques.
6. For Support
For support in designing and developing a DAF strategy as a component of your integrated capital impact journey reach out to us. Chad & Taj, Full Spectrum Advisors and Kinflow Family Office: taj@kinflow.family, chad@kinflow.family
Resources
Full Spectrum Advisors + Full Spectrum Group Kinflow Family Office Movement Strategy Center – Impact Investing