What are DAFs, how do they work, what do you need to know before you get started, and most importantly, is opening one right for you?

Those glossy ads for donor-advised funds (DAFs) next to pages featuring exclusive European vacations make you assume that DAFs are a rich-person thing, but they’re no longer limited to the wealthy. Frum DAFs are now targeting Orthodox donors, who prefer not to sit on their tzedakah money, but to make sure it’s distributed quickly — turning those DAFs into maaser machines. A walk through the new way to give in 2025

You’ve seen the ads, especially December time, telling you to open a donor-advised fund (DAF). They’re sleek and smart looking — and to be honest, they just look like a “rich-person thing.”

You’re not totally wrong; DAFs — which allow donors to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund — used to be an exclusively rich-person thing. But in the last ten years, a few frum DAFs have started targeting the Orthodox consumer, shifting from “gift giving” to “maaser machines.”

Today we’re going to get into it: What are DAFs, how do they work, what do you need to know before you get started, and most importantly, is opening one right for you? Let’s start at the very beginning. What is a DAF anyway?

In the simplest terms, a DAF is a charitable fund into which you can put all your charitable giving (a.k.a. tzedakah), and then you instruct the fund on which organizations your money should go to (that’s the donor-advised part).

Obvious question — why do you need a middleman? Why can’t you just give the money to whomever you want? Obvious answer — there are perks, many of them, to doing it this way.

1. Tax deduction: You can take an immediate deduction on any money or assets you place in the fund, even if you don’t tell the fund to actually disburse the money yet (in fact, it can sit in the DAF for years). This is because once the money is in a DAF, it’s legally no longer yours (and no, there’s no refund button), and you can claim the deduction.
2. Receipts: It happens all the time. You make a donation, they email the receipt, and then… you forget about it. If you’re lucky you flag it in your email and maybe you’ll find it come tax time. With DAFs, you’ll receive a receipt for each deposit you make into the fund, and at the end of the year you’ll receive one aggregated receipt for all the donations you made that year. The DAF disburses the money as you instruct, but because you already handed over your money to them, they’re the ones collecting receipts for themselves.
3. Anonymity: You want to donate to your nephew’s yeshivah campaign; you’re a nice uncle like that (you don’t even wait for the awkward phone call, you knew it was happening from your sister’s status). What you don’t want is to be put on your nephew’s yeshivah’s mailing list. Your only connection is to your nephew, and when he moves on to the next place (and you know he will) you’ll move on, too. DAFs help you “unsubscribe,” because you were never subscribed in the first place.
4. Checks and Balances: A meshulach knocks on your door, and you’re not sure if you trust his teudah. But you’re a kind guy, and he’s a fellow Yid, so you want to give. Still, there’s always that niggling thought in the back of your mind — is this guy legit? With DAFs, the onus is off you and shifted to the recipient, because DAFs can only disburse funds to 501(c)(3) charitable organization or houses of worship, not to individuals.