Banks are the newest DAF sponsor: How philanthropy can be as easy as online banking

For decades, sponsors of donor-advised funds have belonged to one of three segments: national charities, community foundations, and single-issue charities. However, the trend toward digital giving under a DAF 2.0 model positions a fourth segment to emerge: banks.

Generosity is at the core of humanity, and increasingly banks see the deeply personal act of charitable giving as a way to meet increasing competition from commercial sponsors. What’s more, banks are making sure to include donors who do not consider themselves wealthy but who still want to make a difference. Here is how new technology creates opportunity for banks to solidify their place as a prominent segment of DAF sponsors.

The limitations of the traditional DAF 1.0 model.

The first donor-advised funds emerged 90 years ago at Community Foundations and Jewish Federations. It wasn’t until the 1990s when national charities became sponsors that donor-advised funds became a major vehicle for giving.

Last year, national charities saw 75% growth of account openings, while single-issue sponsors and community foundations are stagnating with single-digit rates of growths. Accounts held at national charities make up over 80% of all donor-advised fund accounts, the majority of which are held with commercial DAF sponsors.

The inefficiency and high costs of DAF administration have fallen disproportionately on banks. Large commercial DAF providers have achieved some level of automation and scale in their donor-advised fund solutions. In fact, the largest commercial providers of DAFs recently announced the elimination of account minimums. In contrast, high costs force most banks to limit DAF accounts to private clients and raise account minimums even as competitors eliminate them. Unsurprisingly, growth in donor-advised fund accounts held at banks lags as their clients opt to open accounts with commercial competitors.

Simply put, banks are missing out as they operate under an antiquated DAF 1.0 model.

However, DAF 2.0 technology gives banks the opportunity to engage in the giving space.

Recent entrants into the DAF space are opting for digital solutions powered by’s Philanthropic Platform for DAF 2.0. This automation dramatically improves efficiency and cost for banks and wealth management firms, allowing them to cut account minimums and offer DAFs to more customers. Finally, these financial institutions have the opportunity to compete against the commercial giants of the DAF space by bringing giving directly into the client relationship. 

Like securities trading and wealth management before them, donor-advised funds are being transformed by new technology that drives down cost and democratizes access. Banks can now make philanthropy as easy for their clients as online banking and open up net new lines of business by doing so.

As more banks adopt this DAF 2.0 approach, they strengthen ties by bringing the very personal act of giving into every client relationship. No longer will clients open giving accounts with commercial sponsors when they could have a seamless philanthropic experience right within the website or banking app.

By bringing donor-advised funds into the consumer banking experience, philanthropy becomes as easy as online banking. With access to inexpensive giving options integrated within their banking experience, people of all financial backgrounds can make the jump from occasional donors to philanthropists.

As more financial institutions recognize that doing good is good business, they will democratize philanthropy and compete with the commercial providers that have long-since dominated the DAF space.

To learn more about the changing DAF landscape, get the guide.

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