Nonprofits Are Messy: Lessons in Leadership | Ep. 235: Donor-Advised Funds Demystified

Date: August 30, 2025
Host: Glenda Testone (filling in for Joan Garry)
Guest: Mitch Stein, Head of Strategy at Chariot

Episode Overview

This episode dives deep into the sometimes murky waters of Donor-Advised Funds (DAFs), aiming to demystify what they are, how they work, and why both donors and nonprofits should care. Glenda Testone (of Joan Garry Consulting) sits down with Mitch Stein, a noted expert and data wonk in the DAF space, to bust myths, clarify mechanics, highlight policy shifts, and share practical strategies for maximizing DAF engagement. The conversation is energetic, candid, and full of actionable insights for nonprofit leaders, development pros, donors, foundation staff, and anyone passionate about fundraising innovation.

Key Discussion Points & Insights

1. Mitch Stein’s Journey and Expertise

• [03:39] Mitch shares his path from investment banking to nonprofit tech, fueled by personal passion through fundraising rides and a drive to bridge finance, tech, and philanthropy.
  • "I get to work at this really cool intersection of finance and fundraising and technology and philanthropy." – Mitch Stein (04:56)

2. What is a Donor-Advised Fund (DAF)?

• [05:44] Mitch explains DAFs with simple analogies—a 401(k) for charity—where donors deposit assets, receive an immediate tax benefit, and recommend grants over time, but cannot withdraw funds for personal use.
• Funds can grow through investment, are irrevocably dedicated to charity, and offer donors a psychologically freeing, more intentional way to give.
  • "Once you put money into a DAF...there’s no takesies, backsies.” – Mitch Stein (06:42)
• DAF investments can fluctuate with the market, but generally grow over time.
• DAFs allow donors to avoid capital gains taxes on appreciated assets (e.g. stocks).

3. Legislative Update: 2025 Tax Law Changes & DAFs

• [09:10] New tax legislation (July 2025) introduces above-the-line charitable deductions:
  • Individuals can deduct up to $1,000 beyond the standard deduction; couples, up to $2,000.
• Mass-market use of DAFs expected to surge as a result—no longer just for the “uber rich.”
• Starting 2026, deductions for the super wealthy will be capped at 35%. Expect year-end giving surges in 2025.
  • "That's like, everyday donors...now also those lower dollar givers using a DAF are going to get a tax benefit for it." – Mitch Stein (11:02)

4. Myth vs. Fact: DAFs Busted Wide Open

• DAFs are Only for the Wealthy:
  • MYTH. There are over 3 million DAF donors; while averages are skewed, the median DAF at Fidelity is ~$20,000 and new rules make DAFs practical for annual giving as low as $1,000.
  • 69% of DAF gifts are under $1,000; 92% under $5,000.
    • "It's not just for your major gifts team… it's everywhere." – Mitch Stein (18:34)
• DAF Gifts are Always Anonymous:
  • MYTH. Less than 5% are truly anonymous; many provide partial info (often missing email/address), more a problem of data tracking/stewardship than donor intent.
  • Tip: Create internal systems (“mystery gifts” channel) to track and investigate unclaimed gifts.
• DAF Donors Are All Elderly/Offline:
  • MYTH. Donor age and style varies by DAF sponsor; digital-native DAF platforms are growing among younger givers.
• You Should Thank the DAF Sponsor (e.g., Fidelity) Instead of the Donor:
  • MYTH! Always thank the individual donor; most DAF providers just shred their mountain of mail.
    • "Those people have told me that there's like mountains of mail they're getting, chucking it all in the shredder...build the relationship with [the donor]." – Mitch Stein (23:17)

5. Practical Advice: What DAFs Mean for Donors

• [27:06] Mitch offers three DAF donor archetypes:
  • Organizer (mass market): Uses a DAF for simplicity, budgeting, and to maximize giving engagement/tax receipts.
  • Optimizer (mid-range): Takes advantage of appreciated stock or windfalls; “bunches” gifts for bigger tax impact.
  • Builder (high net worth): Uses a DAF instead of a private foundation for maximum ease.
• "It's more about intentional and engaged giving than the tax benefits." – Mitch Stein (16:27)

6. Why DAFs Matter for Nonprofits (Especially Fundraisers)

• [30:43] DAF giving is the fastest growing channel.
  • Median DAF revenue grew 30% YoY in 2024; other giving declined 1%.
  • Nearly 20% of individual giving is now through DAFs.
• Switching to DAFs increases gift amounts: Donors who switched from credit card to DAF increased average gift size by 10x (mean) and 2x (median).
  • "Same donor, same organization, increase their giving by 10x on average." – Mitch Stein (33:44)

7. Insights for Community Foundations & DAF Providers

• [34:49] Many lack strategy or best practices for running effective DAF programs; few have active outreach.
• Examples like Minneapolis Foundation marketing DAFs (billboards, etc.).
• DAF Day (October 9, 2025): Sector-wide event to raise DAF awareness, engage donors, and increase giving. Chariot provides free resources and toolkits for organizations to participate.
  • "Everybody loves a day, take advantage of it." – Mitch Stein (36:48)

8. About Chariot and DAF Day

• [37:46] Chariot isn’t a DAF provider; it connects DAFs to nonprofit donation forms (“DAF Pay”)—think "Apple Pay for DAFs"—and works with providers/donors to improve transfers and efficiency.
• Aims to centralize resources, create research (e.g., DAF Fundraising Report), and foster education and engagement (webinars, toolkits).
• Any organization or individual can join DAF Day at daftday.com for collaborative tools, resources, and guides.

9. Action Steps for Listeners

Donors

• Talk to your accountant/financial advisor about DAFs and choose the right provider.
• Use DAF Day’s donor guide to assess and select a fund.
  • "I'm not a financial advisor...go chat with them and see what they recommend." – Mitch Stein (42:29)

Nonprofits

• Claim your Chariot account (free) to enable DAF Pay and up-to-date info on all DAF platforms.
• Display your EIN (tax ID) prominently on your website for easy lookup—critical for DAF giving.
  • "If you cannot find it within three seconds, you just lost a DAF donor." – Mitch Stein (45:20)
• Participate in DAF Day with whatever activation is manageable—email, social, events, or toolkits.

DAF Providers/Foundations

• Sign up for DAF Day; join the collective effort to drive awareness and collaboration in the sector.

Notable Quotes & Memorable Moments

• "Once you put money into a DAF…there’s no takesies, backsies." – Mitch Stein (06:42)
• "That's like, everyday donors...now also those lower dollar givers using a DAF are going to get a tax benefit for it." – Mitch Stein (11:02)
• "It's not just for your major gifts team… it's everywhere." – Mitch Stein (18:34)
• "Same donor, same organization, increase their giving by 10x on average." – Mitch Stein (33:44)
• "Everybody loves a day, take advantage of it." – Mitch Stein (36:48)
• "If you cannot find [your EIN] within three seconds, you just lost a DAF donor." – Mitch Stein (45:20)
• "You do not need to send Fidelity a thank you note...but you want to steward and build the relationship with [the donor]." – Mitch Stein (23:17)

Timestamps for Key Segments

• [03:39] Mitch’s backstory and personal journey
• [05:44] “What is a DAF, really?” explained
• [09:10] Impact of 2025 tax law changes
• [13:51] Top DAF myths busted
• [16:55] DAF giving by gift size ($1,000 and under)
• [18:50] Peer-to-peer, online/offline donor myths
• [20:28] Are DAF gifts anonymous?
• [23:14] Who to thank for a DAF gift
• [27:06] “Why would a donor use a DAF?”
• [30:43] Why DAFs matter for nonprofits; fundraising metrics
• [34:49] How community foundations can engage DAFs
• [37:46] What is Chariot and DAF Day?
• [41:27] One thing each stakeholder (donor, nonprofit, DAF provider) should do
• [45:20] Pro tip: Put your EIN on your website

Episode Tone

Candid, practical, myth-busting, occasionally witty, and always focused on empowering listeners—whether nonprofit pros or donors—to take action in a fast-changing giving landscape.

Final Takeaways

• DAFs are here for everyone—not just wealthy major donors.
• Nonprofits: Get proactive in courting, tracking, and stewarding DAF gifts.
• Donors: Consider DAFs for all levels of giving, and talk to your advisor.
• Foundations/DAF Providers: Step up education and engagement—DAF Day is your friend.
• Participate in DAF Day (October 9, 2025) for maximum momentum and learning.

Show notes and more resources available at joangarry.com/podcast and daftday.com.