A new year brings fresh resolutions and, for many clients, a renewed desire to be more thoughtful about their money, including their giving. Many of your clients may already have a donor-advised fund, or DAF. Perhaps you even helped them create it at the end of the year for the tax benefits or as a long-term charitable vehicle.
What’s often missing is an ongoing strategy that keeps the DAF relevant to the client’s evolving priorities. Too often, DAFs sit on autopilot once they’re funded. That creates a missed opportunity for advisors.
Revisiting how DAF assets are invested can open a higher-value conversation — one that goes beyond transactions and into values and legacy, long-term. When positioned thoughtfully, helping clients explore the full range of possibilities within their DAF, from grantmaking to impact investing, offers an avenue for advisors to differentiate their practice in an increasingly competitive market.
Here are three steps that advisors can take to help their clients unlock the full potential of their DAFs and, in the process, strengthen their advisory relationships.
1. Help clients clarify priorities and define success
The foundation of effective DAF strategy is clarity. Advisors play a critical role in helping clients articulate both their philanthropic and financial goals by guiding conversations around:
- Cause alignment: What issues matter most to your client? Examples could include climate, education, social equity or health.
- Legacy building: What outcomes does your client want to see, and how will success be measured over time?
- Geographic focus: Should capital be deployed locally, nationally or globally?
- Risk/return expectations and impact-return tradeoffs: Is your client interested in impact-first opportunities, market-rate impact investments or a blended approach? How do they think about capital preservation versus return potential? Or consider ways to add impact to client portfolios without changing the risk profile.
- Liquidity needs for grantmaking: How much should remain in cash for near-term grants, emergencies or anticipated funding requests?
Establishing these parameters can help create a clear roadmap for deploying DAF assets with intention and uncover more about your clients’ passions.
2. Curate and evaluate impact opportunities
Once goals are defined, advisors can help clients navigate the growing universe of impact investing options available via their DAFs.
These options may include:
- DAF-sponsored investment pools or portfolios: Many DAF providers offer pre-constructed impact portfolios that can serve as accessible entry points.
- Recoverable grants: Recoverable grants are just what they sound like — they allow clients to make grants with the potential to return some or all of the capital over time, increasing the possibilities for long-term giving.
- Private impact investments: For appropriate clients, advisors can help identify mission-aligned funds, nonprofits or social enterprises that support the client’s focus areas for investment via their DAF.
Advisor guidance is especially valuable here — helping clients assess fit, understand tradeoffs and ensure investments align with both impact goals and DAF constraints.
3. Support initial allocations and ongoing review
With a strategy in place, advisors can help clients move from planning to action:
- Execute initial impact allocations or recoverable grants.
- Monitor both financial performance and impact outcomes.
- Refine the strategy over time as client priorities evolve, opportunities change or grantmaking needs arise.
Regular check-ins can help ensure the DAF remains an active, intentional part of the client’s broader wealth and philanthropic plan.
Turn DAF strategy into a relationship advantage
Donor-advised funds can be powerful vehicles for long-term impact when used thoughtfully. Just as importantly, they can be powerful relationship tools for advisors. By proactively engaging clients on DAF strategy, impact investing and intentional capital deployment, advisors can add a new meaningful dimension to their client relationships.
These conversations position advisors as strategic partners who understand not only their clients’ balance sheets, but also their values and legacy goals. In a landscape where clients increasingly expect personalization and insight, not just performance, helping clients activate their DAFs can strengthen loyalty and uncover new planning opportunities.
As clients revisit their goals at the start of a new year, advisors who lead with thoughtful DAF strategy can turn a once-static account into an ongoing source of engagement and long-term value — for both their clients and their practice.
Liz Sessler is the COO and president of CapShift.
Advisors’ Corner is a content partnership between ImpactAlpha and CapShift. CapShift’s impact investing platform empowers financial and philanthropic institutions — and their clients — to invest in their vision for a better tomorrow. All content is solely for informational purposes and should not be used as the basis for investment decisions.
