Beyond Grants: A Quick Guide to Donor-Advised Funds

A conversation with Katherine Smart

If you know me at all, you know I’m a huge advocate for grant funding. A well-planned grant strategy is essential for most nonprofits. Grants fund programs, build capacity, and support longer-term planning.

At the same time, grants tend to work best when they sit alongside other fundraising activities that help strengthen and sustain your organization over time. That’s why I occasionally bring in other fundraising experts to talk about areas that complement grant funding.

Donor-Advised Funds (or DAFs) are one of those lesser-known and often untapped areas. Many nonprofits are already receiving DAF gifts or hearing them mentioned by donors, but do not always fully understand how they work or how to prepare for them.

To explore this, I spoke with Katherine Smart, Generosity and Impact Advisor at Abundance Canada, about why DAFs are growing and how charities can be better prepared to steward these gifts.

What is a Donor-Advised Fund, and why are they becoming so popular in Canada?

Katherine: A Donor-Advised Fund is a charitable giving fund held at a public foundation registered charity. Donors receive an immediate charitable tax receipt when they contribute to their fund and those assets can be invested responsibly over time. Donors then recommend grants to charities they care about. They can decide when to give, how much to give, and whether they want to remain anonymous.

Donor-Advised Funds have become one of the fastest-growing vehicles for philanthropy in Canada. More than 250 DAF foundations now operate across the country, granting over $1.4 billion annually to more than 20,000 Canadian charities. In other words, there is a good chance DAFs are already part of your funding landscape, whether you are actively thinking about them or not.

DAFs are also growing in popularity because they are flexible, tax-efficient, and support thoughtful, long-term philanthropy. Many donors also like being able to involve family members or plan their giving across generations.

From a charity’s perspective, why does DAF preparedness matter?

Katherine: DAFs often represent committed, values-driven donors who want to make a lasting impact. People open DAFs for many different reasons, and DAF holders can include individuals, families, groups, and corporations.

One appealing aspect of DAFs is that they can accept a wider range of assets than traditional cash gifts, such as publicly traded securities or private company shares. From the charity’s side, it is also helpful to know that you do not issue a tax receipt for a DAF gift. The DAF foundation takes care of that part.

Being DAF-ready signals that your charity understands long-term generosity and can manage gifts with transparency and trust.

A concern I hear a lot is feeling disconnected from the donor when a gift comes through a foundation. Is that common?

Katherine: Yes, it is very common. In most cases, the foundation includes the donor’s details with the gift unless the donor has requested anonymity. If you are ever unsure, you can confirm with the foundation directly. Even when donors choose to remain anonymous, charities can still steward these gifts well through thoughtful communication, strong reporting, and sharing impact.

What does being DAF-ready look like in practice?

Katherine: There are a few simple but important pieces:

• Talk about DAFs. Let donors and potential donors know that you accept and encourage DAF gifts. This can be as simple as a note on your website.

• Clear policies. Have gift acceptance and receipting processes in place for DAF contributions.• Relationship building. Treat DAF donors like partners, not transactions. Invite them into your mission and share stories of impact.

• Reporting and stewardship. Provide timely updates on how gifts are making a difference. DAF donors often give repeatedly, and good stewardship encourages future generosity.

Are there any resources you would recommend for charities that want to learn more?

Katherine: Yes. The Canadian Association of Gift Planners recently released a Donor-Advised Funds Resource for Charities, which offers helpful guidance on receiving and stewarding DAF gifts.

Any final advice for charities receiving a DAF gift for the first time?

Katherine: Think beyond the initial donation. Invite donors into your vision, share measurable outcomes, and recognize their role in the impact you are creating. When donors see their values reflected in your work, they are more likely to continue supporting you through their DAF.

Donor-Advised Funds are not just a funding source. They are a relationship-building opportunity. By being proactive and prepared, charities can turn a single DAF gift into a long-term partnership that supports their mission, alongside a strong and effective grant strategy.

Want more practical fundraising insights like this?

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About our guest: Katherine Smart is a Generosity and Impact Advisor at Abundance Canada, a public foundation founded in 1974 that supports charitable giving through donor-advised funds and strategic gift planning. Learn more at abundance.ca