Community Foundations in the DAF Era: Three Winning Paths in a More Competitive Market

Community Foundations in the DAF Era: Three Winning Paths in a More Competitive Market

Community foundations have long played a central and irreplaceable role in American philanthropy, deeply connected to local donors, embedded in community needs, and trusted to steward charitable capital toward lasting impact.

That role remains critical. But the context in which community foundations operate is rapidly evolving.

Over the past decade, donor advised funds, DAFs, have become one of the fastest growing philanthropic vehicles in the country. This growth has expanded the overall philanthropic pie, brought new donors into giving, and accelerated grantmaking at scale. At the same time, it has introduced a more competitive dynamic, one that community foundations can no longer afford to ignore, but also do not need to fear.

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Three data points that frame the moment

A few headline figures help frame why this is a pivotal moment.

According to the Annual DAF Report 2025 published by the Donor Advised Fund Research Collaborative:

Total DAF assets reached approximately $326.45 billion in fiscal year 2024, reflecting a 27.5 percent increase year over year.
The number of DAF accounts grew to a record 3.56 million accounts nationwide.
Grants from DAFs totaled $64.89 billion in FY 2024, while contributions into DAFs reached $89.64 billion.

Source: Annual DAF Report 2025, Donor Advised Fund Research Collaborative
https://www.dafresearchcollaborative.org/annual-daf-report/2025
ScholarWorks publication DOI: https://scholarworks.gvsu.edu/jcppubs/116/

At the same time, the broader philanthropic landscape is also expanding. According to Giving USA 2025, total charitable giving in the United States reached $592.5 billion in 2024, representing a 6.3 percent increase in current dollars over the prior year.

Source: Giving USA 2025
https://www.ccsfundraising.com/insights/perspectives-on-philanthropy-giving-usa-2025/

These numbers do not diminish the importance of community foundations. But they do clarify the environment. Philanthropy is evolving. Donor expectations are shifting. Competition is already here.

The encouraging news is that community foundations are responding in thoughtful, mission aligned ways.

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Three strategic paths emerging across community foundations

Across the country, we are seeing three distinct and entirely viable approaches to navigating the DAF era. Each reflects different market realities, operating models, and strategic priorities.

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1. Doubling down on place based impact, with DAFs as a supporting tool

Many community foundations are choosing not to compete head to head with national DAF sponsors on product breadth, pricing, or technology scale. Instead, they remain focused on what has always set them apart:

Endowments, agency funds, and field of interest funds

Long term community leadership and convening power

Deep relationships with donors who care most about local impact

In this model, DAFs are offered, but not emphasized as the centerpiece of the organization’s value proposition. These foundations are often more heavily endowed, less dependent on DAF revenue for operations, and oriented around campaigns, initiatives, and long term community outcomes.

For donors aligned with local impact, this approach remains powerful and compelling. National trends around investment menus, fee compression, and product competition are acknowledged, but not allowed to dictate strategy.

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2. Focused foundations using DAFs to advance specific impact priorities

A second group of community foundations is taking a more targeted approach, building DAF programs that intentionally support a defined set of impact areas.

Rather than seeking broad volume growth, these organizations emphasize:

Curated local giving opportunities

Strong philanthropic advisory services

Clear pathways from donor intent to measurable outcomes

This model resonates particularly well with donors who want flexibility in how they give, but still want their philanthropy anchored in purpose and results.

It also reflects a broader donor reality. Today’s donors are increasingly geographically distributed. Careers, families, and philanthropic interests often span multiple regions. Community foundations that can speak confidently to both local depth and broader philanthropic reach are better positioned to remain relevant in this evolving donor landscape.

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3. DAF forward community foundations competing more directly with national sponsors

The third path, most common among larger community foundations or those more dependent on DAF economics, is a deliberate investment in competing more directly in the DAF market.

These organizations recognize that:

Donors increasingly expect low fees, flexible investment options, and strong digital experiences

Advisors and RIAs want DAF platforms that integrate smoothly into broader wealth strategies

Ignoring DAF competition is not a sustainable option for foundations without large endowments or separate operating fundraising

In response, these foundations are re examining fee structures, expanding investment flexibility including support for complex assets, investing in technology and operational efficiency, and exploring partnerships, private label programs, and advisor centric models.

Importantly, this strategy does not require abandoning local mission. The most successful organizations in this category are those that combine competitive DAF offerings with the added value of local knowledge, relationships, and community credibility.

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A uniquely powerful opportunity: localized impact investing

Across all three paths, one opportunity stands out where community foundations have a distinct advantage: localized impact investing.

With over $326.45 billion sitting in DAFs nationally, community foundations are uniquely positioned to help donors:

Invest locally in affordable housing, workforce development, and small business growth

Support community lending, climate resilience, and infrastructure

Align investment capital, not just grant dollars, with local needs

This is an area where community foundations can lead the next evolution of philanthropy, helping donors put all of their charitable capital to work for impact, not just the portion designated for grants.

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Competition is real, and that is a good thing

For many years, philanthropy has avoided competitive language. But competition is already shaping the market. When embraced thoughtfully, it can be healthy, driving better donor experiences, clearer value propositions, and stronger institutions across the sector.

National DAF sponsors play a critical role in expanding access and scale. Community foundations play an equally critical role in anchoring generosity in place, relationships, and long term impact.

The most important question for community foundation leaders today is not whether to respond to the DAF era, but how.

Where do we provide unique value?
What donor segments are we best positioned to serve?
And how do we align our products, services, and investments with the future of philanthropy?

There is no single right answer. But there is a clear opportunity for community foundations to define their path forward with confidence, clarity, and purpose.

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About the Author

Lucas Cherry is the Founder and CEO of Give Interactive, a technology platform that supports donor advised fund sponsors, community foundations, and philanthropic institutions across the country. Give Interactive works with both community foundations and national DAF sponsors, providing a unique vantage point into how different organizations are navigating growth, donor expectations, and the evolving economics of philanthropy.

Through ongoing partnerships, implementations, and board level conversations, Lucas and his team engage with leaders across the philanthropic ecosystem, from locally focused community foundations to some of the largest DAF sponsors in the country. These conversations often span strategy, operations, investment considerations, donor experience, and the long term role institutions play in supporting generosity.

The observations shared in this article reflect patterns and themes emerging across those conversations. They are not intended as prescriptions, but as a synthesis of how organizations across the space are thinking about their role in a rapidly evolving market, one where community foundations and national DAF sponsors each play an essential and complementary role in advancing philanthropy.

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