Stephanie Sessa, CAP®, Senior Donor Relations Officer, leads a portion of our ‘Donor Advised Funds: Explained’ education session held this spring.
Donor Advised Funds (DAFs) are among the most accessible and effective tools for individuals, families, and businesses to support the causes they care about—while also offering valuable tax advantages. It’s no surprise that DAFs have continued to grow in popularity. In 2023 alone, they facilitated more than $54.8 billion in charitable grants nationwide.
Since 1977, Austin Community Foundation has helped Central Texans make a lasting impact through strategic giving, and DAFs are just one way we achieve this. Understanding how they work can empower more people to give intentionally and support the evolving needs of our region. Below, we answer commonly asked questions about DAFs.
What exactly is it, and how does it work?
A DAF is a charitable giving account managed by a public charity. You can think of it as a savings account for philanthropy. Donors make a tax-deductible contribution—cash, stock, or other assets—and then recommend grants to nonprofits over time. At ACF, fundholders can name their fund, choose advisors, and select from five investment options to grow their charitable dollars tax-free. Once you establish the fund, you can give at your own pace through one-time or recurring grants.
What are the tax advantages and contribution options?
DAFs offer immediate tax deductions:
- Up to 60% of adjusted gross income (AGI) for cash gifts
- Up to 30% for appreciated securities
- Potential to avoid capital gains tax on donated assets
Unused deductions can typically be carried forward for five years.
You can contribute a wide range of assets to a DAF—including cash, stock, real estate, business interests, and more. ACF is uniquely equipped to accept complex gifts that many providers cannot.
How much do I need to start a DAF? What’s the average size?
At ACF, an endowed or quasi-endowed fund that is invested in the market is recommended to start with at least $25,000. There is no minimum for non-endowed funds, though it’s important to define your goals early to guide your giving.
DAFs are accessible at many levels of philanthropy. In 2024, the DAF Research Collaborative estimated that only 7% of funds in the U.S. have a balance of over $1 million. According to the National Philanthropy Trust’s The 2023 DAF Report, the average size of an individual DAF in the U.S. is estimated to be $117,466.
Who benefits from a DAF?
Both donors and nonprofits benefit. Donors gain flexibility, tax savings, and ease of administration. Nonprofits receive sustained support and fewer administrative burdens.
When you open a DAF with ACF, you’re also investing in your local community. About 70% of our fundholder grants stay right here in Central Texas, fueling the work of nonprofits that address housing, education, health equity, economic opportunity, and more.
DAFs allow you to give more strategically, build relationships with new causes, and stay engaged in issues that matter to you.
How long can funds remain in a DAF, and how much is typically granted each year?
It depends on the type of fund you set up. DAFs can be:
- Endowed (grants come from investment earnings and the principal remains intact),
- Quasi-endowed (partially restricted), or
- Non-endowed (can be entirely spent down).
There’s no mandatory payout rate, but nationally, DAFs grant an average of 20% of their balance annually.
What happens to a DAF after I’m gone?
You get to choose how your legacy of generosity is defined. You can:
Rebekah Anthony, CAP®, Senior Director of Donor Engagement, speaks with a prospective donor at a recent DAF information session.
- Appoint successors to continue advising the fund
- Set up automatic distributions to designated nonprofits
- Trust ACF to steward remaining funds for the community’s evolving needs or specific interest areas of your choice.
We also offer planned giving support to help ensure your legacy continues across generations.
Many donors choose ACF as their trusted partner in philanthropy because we offer local expertise, personalized service, and decades of experience serving Central Texas. We connect donors with emerging needs and meaningful causes through grant partner tours, educational sessions, events, and volunteer opportunities.
We’re here to make giving simple and meaningful. Curious to learn more? Our team is ready to connect—just click below to get started.
