7 Common Myths About Donor-Advised Funds (DAFs)

Donor-advised funds (DAFs) are an increasingly popular tool for charitable giving, yet misconceptions still persist. At Provision, we believe DAFs can be an accessible, strategic, and impactful way to manage generosity. Here, we address seven common myths surrounding DAFs and set the record straight. 

Myth 1: You have to be wealthy to open a DAF. 

Many people assume that DAFs are only for high-net-worth individuals, but that’s not the case. At Provision, we offer a low starting contribution of just $1,000, making it easy for anyone with a heart for generosity to open a DAF. Whether you’re giving a little or a lot, a DAF can help you steward your resources wisely while maximizing your impact. 

Myth 2: You can give to any charity you want through Provision’s DAF. 

While some DAFs allow donations to any 501(c)(3) organization, Provision’s DAF is designed specifically to support Baptist and other causes that align with our mission and values. This ensures that every dollar you give is directed toward ministries and organizations that advance the gospel and/or serve communities with Christ-centered approach. 

Myth 3: You have zero control over your DAF. 

Some assume that once you contribute to a DAF, you lose all say in how the funds are used. However, as a donor, you retain the ability to recommend grants to eligible charities. While the final approval rests with Provision to ensure alignment with biblical stewardship, your giving priorities remain central to how your DAF is managed. 

Myth 4: DAFs are just the latest trend.

In reality, DAFs are one of the fastest-growing charitable giving vehicles in the country. They provide a flexible and tax-efficient way for individuals and families to support causes they care about. More and more donors are discovering the benefits of DAFs as a tool for long-term generosity. According to The National Study on Donor Advised Funds, the most common ages for donor advisors are between 55 and 80 years old. However, Fidelity Charitable reports that the number of donors establishing DAFs in their 20s and 30s is growing, making it a great giving instrument for any age group. 

Myth 5: DAFs are a complex form of charitable giving. 

While the name may sound technical, a DAF is actually a simple and user-friendly way to give. Once you make a contribution, you can recommend grants to approved organizations at your convenience. Provision also provides guidance and support to help you navigate the process, making generosity straightforward and impactful. 

Myth 6: It’s better to donate directly to a charity rather than pay DAF fees.

While giving directly to a charity is always a good option, a DAF offers unique benefits, including tax advantages, strategic long-term giving, and the ability to invest funds for potential tax-free growth before making grants. Charitable organizations often have gift acceptance policies that do not allow for complex gifts which could make it difficult to give appreciated stock or other assets to them. Through a DAF, you can make a contribution with a complex asset, sell the asset within the DAF, and then make a cash distribution to the organization you choose. The administrative fees associated with a DAF help cover management and oversight, ensuring your giving is handled efficiently and effectively. Provision strives to keep the administrative fees low, so you can make the biggest impact with these funds.  

Myth 7: I'm the only one who can manage my DAF. 

DAFs offer flexibility not just in giving but also in management. You can name successors or appoint advisors to help oversee the fund, ensuring that your generosity continues even beyond your lifetime. A 2024 study found that 92% of DAFs have a succession plan in place. This makes DAFs a great tool for family-based charitable giving, allowing you to pass on a legacy of stewardship. 

The Bottom Line 

Donor-advised funds are a powerful, accessible, and faith-aligned way to give. Whether you're new to charitable giving or looking for a more strategic approach, a DAF through Provision can help you maximize your impact while staying rooted in biblical stewardship. If you're interested in learning more, contact us today to explore how a DAF can support your generosity journey.