In many communities, meshulachim affiliate themselves with particular organizations, which essentially work as a control mechanism for the donor. Whatever money you give the meshulach goes to the organization, which then donates it to him. If the person is not legit, the organization won’t release the funds to him, and your donation will go to the organization. This setup allows donors to give with ease and generosity, because the onus of verification is not on them, and there’s a built-in system of checks and balances.

What’s the advantage of using a Jewish DAF over a secular one?

While technically they both do the same exact thing, it’s understanding the needs of the client base that makes each one unique. Secular DAFs (like Fidelity, Schwab, or Vanguard) were built for long-term giving. They stockpile donations now to give out decades later, creating a substantial gift; think scholarships, buildings, or endowments. The monies held can be invested by your advisement with the (tax-exempt!) proceeds added to the fund, which can seriously compound the value of the donation. They charge fees based on assets held, and average annual disbursement rates are around 20 percent.

Jewish DAFs like OJC, Pledger, or The Donor’s Fund have a very different clientele with unique needs. Jews tend not to want to sit on their tzedakah money; they want to give it out, and fast. Therefore, Jewish DAFs are optimized for easy giving, whether through DAF-issued credit cards, checks, electronic money transfer between banks (often referred to as ACH, for Automated Clearing House), or integration with charity crowdfunding platforms. Their disbursement rates are much higher, some as high as 70 percent.

Jewish DAFs make their money generally in one of two ways. Some charge for transaction fees, because charging based on money held won’t yield much. Others charge fees on transactions that are unavailable to secular DAFs. Research individual DAFs to understand their fee schedule and financial model.

Step-by-Step: How a DAF Works

1. You contribute cash, stock, or other assets to the DAF.
2. You receive a tax receipt immediately.
3. The DAF holds the money (some offer investment options).
4. You donate money through designated methods depending on your DAF. Options are credit cards, preprinted checks, electronic transfer, and wires.
5. The DAF sends the money as a donation from its fund.

Guardrails

Every DAF has a different system in place to prevent errors and make sure they’re sending the donations you intend to make. Generally, they ask the user to set a limit on their account. Any donation under that limit is automatically approved, and anything upward needs additional approval, typically via email. Think of it like your bank checking in and making sure you intended to spend $3,000 at the grocery store (they don’t know it’s Erev Pesach).

On average, if you distribute an amount upward of your preset limit, DAFs wait five days for your approval; if they don’t hear back from you, they distribute the funds. If you know you’re donating above the limit and want to make sure the organization gets the money sooner, stay on top of your emails.

Deadlines and Delays

While there are a lot of upsides to DAFs, things get trickier when a cause is time-sensitive. While donors can swipe, write checks, and click “donate now” at any time of the day, there are closing limits on the DAF’s end, generally 5 p.m. Usually, any donation made later than that is included in the next day’s batch and won’t be distributed for an additional day. Keep in mind that banks don’t process anything on weekends; if you only take care of the donation after 5 p.m. on a Friday, your money may not get to its destination until Tuesday! If your donation is time-sensitive (e.g., Purim) make sure you send it in with enough time to allow for processing. Note: This is something to take in consideration if you’re thinking of using a DAF versus no DAF. But if it’s Jewish DAF versus a secular DAF, the Jewish DAFs are much faster in payment.

Other things to be mindful of are memos and Yom Tov. When you add a memo to your donation, the system flags it for a manual review instead of automatic approval. This takes manpower and slows the process down. Sometimes it doesn’t make a difference, but if time is of the essence, skip the memo.

The calendar will also affect how quickly donations are processed. Jewish-run DAFs close for Yamim Tovim, just like you. So when they come back afterward, they’re often swamped with work. If you can time your donations to avoid the Yom Tov crunch, it’ll get to your tzedakah faster.

DAF FAQs

How much money do you need to put in?

It depends on the DAF. Some need a minimum of $25,000 to open a new account, whereas for others, the amount is $0. Do your research.

How big do your donations need to be?

Many secular DAFs have minimum donation amounts, often $50. Jewish DAFs usually don’t have a minimum.

How do they make money?

Many Jewish DAFs earn processing fees on transactions or for other services provided, while secular ones charge a percentage of assets held yearly.

Do DAFs invest the money while it’s sitting there?

Yes and no. DAFs fall under prudent investment laws, meaning they need to be cautious and prudent with their investments. What you need to understand is that this applies to the fund as a whole, not individual accounts. So generally, most accounts are held in cash or US treasuries by the donor’s choice. This gives other account holders the opportunity to branch out and invest in other opportunities. It’s always a balancing act for DAFs to ensure their funds are proportionality prudent and responsible. Investing is the donor’s choice if the DAF has the option. Advising to invest your donation gives your money a chance to grow, and your eventual donation will be bigger.

Can you get the money back if you change your mind?

Nope, once your money is in the DAF, it’s no longer yours. You’re limited to advising where it can go.

What are the fees and downsides?

The first, most fundamental downside is that some of your money goes toward overhead expenses, and not to the charity. The specifics of how much will vary based on the DAF. The Jewish ones generally charge per transaction and for check printing and the like. For some transaction types (electronic ones for example), DAFs don’t charge a fee. Non-Jewish DAFs charge admin fees, generally a percentage of the money/assets in the account.

Do you lose control over your donations?

You always have control over where your donations go: You are the advisor. While technically they can ignore your instructions or declare unutilized funds available for their own donations, they won’t, because you’re the customer, and they want you to be happy.

Can you tell the DAF to earmark your donation to a specific person, say the son-in-law you’re supporting in kollel?

No, you can’t give to an individual, only to recognized organizations or houses of worship.

Financially Savvy DAF Hacks

IF

you have the financial know-how, you can leverage that knowledge to maximize the benefit a DAF can give you. One way is selling stocks. Say you’re planning to give a $10,000 donation this year. You can write a check… or you can be smarter about it, and give stock instead.

Here’s how it works:

Let’s say you paid $2,000 for a stock over a year ago that’s now worth $10,000. If you sell it, you’ll owe capital gains tax on the $8,000 profit. But if you donate that stock directly to your DAF instead of selling it, you avoid paying any tax on the gain. You still get the full $10,000 charitable deduction, and the charity (your DAF) doesn’t pay tax either.

Now here’s the cool part: You take the $10,000 you were going to donate in cash and use it to buy back the same stock at today’s price. That resets your cost basis — now if you sell it in the future, your taxable gain starts from the $10,000 price, not the original $2,000. Translation: You gave tzedakah, avoided taxes, and cleaned up your portfolio at the same time.

It’s a triple win:

• No tax on the stock’s gains
• Full deduction for your donation
• Higher cost basis going forward (a.k.a. lower taxes later)

Note: This only works for long-term gains: stocks that held for more than a year.

Another idea is bundling. Let’s say you give $15,000 to tzedakah every year — that’s beautiful. But unless you have a lot of other deductions (like mortgage interest or big medical expenses), you might not be itemizing your taxes. In 2025, the standard tax deduction for families is $24,000. Once you pass that threshold, other donations are classified as “charitable donations,” which translate to a better tax refund rate. Which means if you don’t hit that number, you get no extra tax deductions for all that chesed.

Enter bundling.

Here’s how it works:

Instead of donating $15,000 every year, you donate $30,000 every other year. Because you gave more in a single year, you cross the standard tax deduction threshold and now excess donations are deducted at a higher rate. Boom — tax deduction. But don’t worry, you don’t have to give away the whole $30,000 at once. You put it into your DAF, take the deduction now, and then disburse it slowly — monthly, quarterly, whatever works for you. You still support your usual causes on your usual schedule —  but you get a tax break that you would’ve missed by spreading it thin. It’s like shopping in Costco: same cereal, bigger box, lasts longer, better pricing.

Bottom line: If you have the cash to set aside, this is a great tip. Ultimately, you give the same amount, but you time it right so Uncle Sam gives you a little back.

Finally, you can also leverage a DAF to sell assets. The process is very technical and tricky so I’m not gonna bore you here, but just know that it’s possible. You want to do this to save on taxes, of course.

Who Should NOT Open a DAF

I

nevitably, now we’ll come to the fine print. If you identify as one of the following, DAFs may not be worth your while.

1. You take the standard deduction, and you like to keep your finances simple. If you’re not itemizing your return, you’re missing out on the DAF’s biggest perk and it’s not likely worth it for you. Keep it simple, forget receipts, and give tzedakah directly.
2. You mostly give to individuals. You’re the type of person who shows up when it counts in your community. You pay the rent, the grocery bill, you fund therapy for your family and neighbors in need. Or maybe you’re supporting your kids in kollel. As DAFs can only disburse 501(c)(3)s, they’ll just get in the way of your giving.
3. You’re last-minute. You know yourself. Those statuses right before Yom Tov tug at your bleeding heart. If you want your money to show up when it’s needed most and you’re not the early-bird type, a DAF might not be for you.
4. You don’t give enough to make the fees worth it. This is particularly true if using a secular DAF, as the Jewish ones have fees per transaction. If you’re only donating $500 a year, it’s not worth it to pay $100 in fees. This doesn’t apply to all DAFs; some have no fees.
5. You’re gonna sit on it. Once the money is out of your checking account, it’s easy to forget about it. Maaser is meant for giving, not hoarding, and leaving tzedakah there all winter to freeze isn’t good for your neshamah.
6. You’re only using it as a loophole. You’re more focused on the tax benefits than the giving side. You’ve lost the spirit of the DAF and of tzedakah.

Rabbi Doniel Neustadt answers halachic questions about DAFs

Does money put into a DAF count as giving maaser? Or only when it’s disbursed to a qualifying tzedakah?

It counts as beginning the process of giving maaser, but it’s not complete until the recipient receives it.

Is a tax deduction from a DAF considered hana’ah (personal benefit) that affects the maaser calculation?

It’s no different than any donation that’s tax deductible. It is permitted since one is allowed to receive personal benefit when giving maaser.

Can maaser money be used to open or contribute to a DAF, like for the processing or admin fees? That money won’t actually go to tzedakah, but will facilitate tzedakah distribution.

Yes.

If someone contributes appreciated stock or assets to a DAF, do they calculate the maaser based on the fair market value or the original cost basis?

It’s calculated based on the fair market value.

Can someone use their DAF to give to causes that are not halachically considered tzedakah, like museums or general nonprofits?

You can do what you want, but you cannot use maaser money and it won’t be considered tzedakah.

If the organization someone donates to through the DAF takes a percentage off the top for processing, is that amount deducted from the maaser? What about the DAFs processing fees?

All legitimate expenses involved in giving tzedakah are part of giving maaser, even if the recipient will actually receive less than what you donated.

If someone puts money in a DAF in December but doesn’t disburse it until the next tax year, which year does it count for maaser purposes? If someone earns income in 5785 but contributes to a DAF in 5786, does that count as giving maaser on the income?

First, it doesn’t work this way. Once you figure out how much money you owe and designate that money as maaser, you may disburse it whenever you see fit. Second, yes, it counts as giving maaser on the income.

Is there a maximum delay allowed halachically between setting aside maaser (into a DAF) and disbursing it?

No. It’s always best to get rid of the money as soon as you can, but you’re allowed to wait for the right opportunity.

Can someone prepay future maaser obligations into a DAF, or should they only contribute once income is earned?

L’chatchilah, only once the income is earned.

Does the fact that DAFs can invest money in the interim raise any concerns about ribbis?

No, there are no ribbis issues.

This article is for explanatory purposes only and does not intend to serve or replace individualized financial advice.

Thank you to Ari Luss from The Donor’s Fund for the knowledge and expertise he lent to this article.

Thank you to Jacob Schweitzer from Pledger and Sarah Rivka Kohn from LINKS for their insight.

(Originally featured in Mishpacha, Issue 1076)