DAF rules: what can you use a donor-advised fund for?
Donor-advised funds (or DAFs) are an easy way to give generously and with intent. They’ve become one of the most popular giving vehicles for donors who want structure without the red tape of a foundation. DAFs are designed to help individuals and families structure their charitable giving, save money on taxes, and give back to the things that matter to them, all within the guidance of IRS laws.
If you’ve ever wondered what a DAF can and can’t do, or how to use one wisely, this guide breaks it all down. It covers the main donor-advised fund rules, what the IRS allows, and how GoFundMe Giving Funds makes the whole process simple and human-centered.
What you can use your DAF for
DAFs are a great way to support qualified charities in a tax-exempt structure while keeping your giving organized.
✅ Make grants to IRS-qualified 501(c)(3) public charities
✅ Support other nonprofit organizations like hospitals, schools, or your community foundation
✅ Fund scholarship programs (with approval and oversight from your sponsoring organization)
✅ Contribute to verified crisis relief and disaster response initiatives
✅ Recurring donations to your favorite charities
✅ Give anonymously if you prefer privacy
✅ Invest your charitable contributions with the potential to grow your giving balance tax-free, all managed within your DAF account.
Your qualified charitable distribution goes farther with GoFundMe Giving Funds, allowing you to do all of this while ensuring your charitable gifts go directly to organizations that qualify under federal tax law.
What you can’t use your DAF for
There are several restrictions put in place to protect donors and charitable organizations, so you don’t go against donor-advised fund rules.
🚫 Personal benefit
Your DAF can’t be used for anything that benefits you or your family members directly. That includes:
- Tickets or tables at galas and fundraising dinners
- Tuition payments or school-related fees
- Membership dues for nonprofit clubs
- Auction items, raffles, or anything received in exchange for your donation
🚫 Direct gifts to individuals
DAFs can’t make grants directly to a person, even if they’re in need. However, you can still help people by giving through verified charitable organizations that distribute funds to individuals or families on your behalf.
🚫 Political activity
Donor-advised funds can’t be used to support political campaigns, lobbying, or advocacy that doesn’t qualify as charitable under IRS definitions.
🚫 Pledges
DAFs can’t be used to fulfill a legally binding personal pledge. You may still recommend a grant to that same charity, but it can’t be labeled as a pledge payment.nt to that same charity—you just can’t count it as fulfilling a pledge.
Who decides what’s allowed?
Who decides what’s allowed?
Every DAF has a sponsoring organization (like GoFundMe Giving Funds) that manages due diligence and compliance. The sponsoring organization verifies that each grant supports legitimate charitable purposes and meets all IRS requirements.
DAFs are regulated under the Internal Revenue Code, Section 4966, and sponsoring organizations report all activity annually on IRS Form 990.
Real examples of what’s allowed
| Scenario | Allowed or not allowed? | Why |
| Recommending a grant to a local food bank | ✅ Allowed | It’s an IRS-qualified public charity |
| Paying for a charity gala dinner | ❌ Not allowed | Personal benefit (meal, entertainment) |
| Donating to your child’s nonprofit school | ✅ Allowed | Only if the donation isn’t for tuition |
| Giving to a GoFundMe for a family in crisis | ✅ Allowed (if verified) | Routed through a registered nonprofit partner |
| Supporting a political campaign | ❌ Not allowed | Political donations are not charitable |
Staying compliant with confidence
To make the most of your DAF while staying on the right side of IRS regulations:
- Recommend grants only to IRS-qualified public charities
- Steer clear of anything that provides a personal benefit
- Donate with your DAF to nonprofits, not individuals
- Collaborate with your sponsoring organization or financial advisor to confirm that your charitable giving plan aligns with your philanthropic goals
How GoFundMe Giving Funds makes it easier
GoFundMe Giving Funds makes charitable giving easy and enables you to keep everything transparent, simple, and secure.
You’ll get:
- Single receipt for all your gifts of charity
- Tax-free investment options to grow your giving power
- Verified nonprofits and community foundations to donate to
- No minimums, no surprise admin fees
- The ability to give as little as $5 anytime, anywhere
It’s charitable giving built for real life: personal, simple, and full of heart.
Give with clarity, confidence, and compassion
Understanding donor-advised fund rules isn’t just about compliance. It’s about giving wisely and knowing your generosity truly helps. There are charities that move you, and GoFundMe Giving Funds helps you support them with as much tax benefit and impact as possible.
Frequently asked questions
Can I use my DAF to donate to my church?
Yes. Nearly all religious institutions are 501(c)(3) public charities according to Internal Revenue Service regulations. Just be sure your donation doesn’t come with personal benefits (e.g., paying for services or dues).
Can I support someone’s GoFundMe with my Giving Fund?
No, but if the fundraiser is connected to a verified nonprofit, you can give grant recommendations to that charity. Our Giving Fund simplifies this by surfacing trusted, charitable partners aligned with your interests.
Are there penalties for breaking the rules?
Yes. Should it be found that a DAF is used for an improper benefit or donation, both the donor and fund manager can incur IRS excise taxes —calculated at up to 125% of the amount either misused. That’s why compliance matters.
How long can funds stay in a DAF?
There’s no strict time limit. DAF funds can remain in the account indefinitely as long as they’re used for charitable purposes. There’s no 5% rule like private foundations have, but most sponsoring organizations encourage regular grantmaking so charitable contributions don’t sit idle.
What about the “DAF loophole”?
Some people think DAFs are a tax loophole, but that’s not the case. The IRS closely supervises donations to make sure they’re used for charitable purposes. Once you contribute to a DAF, that money is no longer under your control. You can’t pull the money back out or use it for personal benefit.
Each sponsoring organization has a fiduciary duty to confirm grants meet IRS standards and that funds aren’t used for anything other than philanthropy.
Can DAFs support international charities?
DAFs can make international donations using intermediaries or U.S.-based supporting organizations that meet IRS guidelines for overseas giving. GoFundMe Giving Fund makes sure that all international donations go to a verified, compliant nonprofit through due diligence.
Can donor-advised funds be passed on to heirs?
Yes, they can. Many people name a child, spouse, or another family member as a successor advisor so the fund (and the spirit behind it) keeps going. It’s an easy way to pass down your values, not just your money, and keep your family’s charitable goals alive for years to come.
What are the tax benefits of a DAF?
- Immediate tax deduction: You are eligible to take a tax deduction in the year your contribution is made, subject to IRS limitations (usually 60% of adjusted gross income for cash gifts and 30% for appreciated assets).
- Avoid capital gains tax: By donating appreciated assets, or non-cash assets such as stock or cryptocurrency and real estate, you can bypass capital gains taxes and give more overall.
- Tax-free investment growth: Contributions can be invested, allowing your charitable balance to grow over time.
- Simplified recordkeeping: One tax receipt covers all your charitable giving for the year.
This content is for educational purposes only and does not constitute tax, legal, or investment advice. Any financial or tax-related calculations provided are illustrative examples only and should not be relied upon for making financial decisions.
Laws and regulations regarding donor-advised funds vary, and tax benefits depend on individual circumstances. Readers should consult with a qualified tax, legal, or financial professional for personalized guidance.