Bridging the Generational Giving Gap: How Donor Advised Funds (DAF) and Digital Innovation are Reshaping Philanthropy

There is a $38 trillion shift currently underway in American philanthropy, and it isn’t happening via the mailbox. As Millennials and Gen Z become the recipients of the greatest transfer of wealth in history, via inheritance, career success, and other milestones of economic maturity, they aren’t just changing who gives. They are changing how they give. Donor Advised Funds (DAF) are becoming the giving method of choice for these emerging leaders, and as a current DAF donor and former annual giving practitioner I have experience from both sides of this equation.

I know what it’s like to be presented with a monthly leadership donor list from your CRM, find yourself staring at 50 entries from the community foundation, and left wondering which are board members waiting for a thank you. I also know how it feels to direct a distribution to a cause you’re deeply invested in and worry that something went wrong when it takes a month for acknowledgement to arrive.

Luckily, strategies and solutions are emerging that address the friction, complication, and mismatched experience expectations and will greatly increase the benefits to all nonprofits that adopt them.

The modern DAF landscape: A shift in the philanthropic “wallet”

DAFs are no longer a niche tool for the ultra-wealthy. With over 3.5 million DAF donors in the U.S. across all economic levels, the DAF has become the preferred vehicle for many emerging leaders. The fastest-growing population of DAF users is under the age of 40.

According to data from the forthcoming The National Alumni Survey for 2026, 82% of alumni are philanthropic either financially or through volunteering, yet only 35% made a gift to their alma mater in the last year.* This isn’t a lack of generosity; it’s a preference for impact-focused giving and modern gifting experiences. There is an expectation for speed and information that more traditional methods of gift acceptance and stewardship can’t always match.

DAFs aren’t a parking lot for wealth. Donors, especially younger donors, are using DAFs to be thoughtful, generous, and strategic about their generosity and to generate the max benefit for the organizations they support. These donors know they want to give, and it’s important that your organization be in step with them via clear communication, personalized outreach, and user-friendly distribution methods.

 *The 2026 National Alumni Survey will be available in March 2026.

The DAF opportunity for fundraisers with DAF

DAF gifts represent $12 billion in annual nonprofit revenue, while DAFs are often associated with major gifts—and for good reason. Nearly 70% of DAF gifts are under $1,000, often representing initial gifts or stepping-stones to higher engagement with your organization. Solid stewardship and communication strategy with these emerging prospects are key to developing the mutual beneficial philanthropic relationship that will drive future pipeline sustainability.

You likely have donors now who are considering or have recently started managing their giving via DAFs and that represents great opportunity for you. According to the 2025 Annual DAF Fundraising Report, donors who switch from traditional methods to DAF show a 10x increase in their total giving to that organization and have higher year-over-year retention rates compared to traditional donors (60% to 46%).

The message is clear: when you make it easy for a donor to give via their DAF, they give more, and they stay longer.

A five-step strategy for holistic DAF success

1. Tell them: Your acceptance of DAF gifts should be as apparent as your “Give Now” button and mailing address for checks. Make sure all your staff are well-versed and familiar with your DAF options and policies, this isn’t just a planned gift role anymore.
2. Find them: Determine how DAF donors are currently tracked in your CRM and implement new processes if they don’t currently exist. Use wealth-screening or other key identifiers create lists of likely DAF users and leverage specific marketing in appeals and staff outreach to help these donors “self-identify” before an official gift is made.
3. Convert them: While DAF donors are sophisticated and informed, 88% will still give outside their DAF for spontaneous gifts. Many will abandon the process due to complication. If they have to leave the organization’s site, log in to a portal, find an EIN, etc., they will often default to a smaller credit card gift or lose the “giving moment” entirely. Address the friction by ensuring the “Give via DAF” option is as prominent and easy as a credit card transaction.
4. Track them: The current distribution and reconciliation process for DAF gifts is a mess. From “mystery checks” to EFTs with no or limited individual donor data we risk a myriad of negative process outcomes from inadvertent duplicate records, hard/soft credit mismatch, to a worst-case scenario of not being able to thank a donor at all. We need to be finding and implementing systems that capture ALL the critical information at moment of gift so we can quickly acknowledge, reconcile, and develop the relationship with these donors.
5. Grow them: Once you know who your DAF donors are and they are utilizing this strategic method to give, make sure your donor relations and renewal communications are tailored to reflect this. You could create special recognition groups or levels, craft donor impact stories centering on DAF support, participate in special events such as National DAF Day, or build custom challenges and matches into your existing giving days or crowdfunding models.

What can you do today? Encoura + RNL ScaleFunder & DAFpay

While building and executing a comprehensive and robust DAF strategy will take time and collaboration, addressing the key problem of friction for donors can happen now. Encoura+RNL is proud to offer Chariot DAFPay integration as a part of our ScaleFunder digital giving platform.

Conclusion: Use DAFs to make it even easier for donors to give

The shift in the donor landscape isn’t a future possibility; it’s an active reality. By bridging the gap between donor intent and a seamless digital experience, your institution isn’t just modernizing a transaction, you are securing your place as a top philanthropic priority for the next generation.

Watch our webinar, Starting at the Source: A Look into Data-Driven Paths to Donor Growth, where we dive into more detail on insights about how DAF donors are changing the landscape to learn more.