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ABOUT DAFS

FAQs: 

Welcome to the DAF Salon FAQs. In this era of the 2025 Crossover—where DAF contributions have surpassed venture capital fundraising —DAFs are a powerful tool for impact. Directing grants to TheNewClimate can scale solutions in climate resilience and national security. We pose questions you might not think to ask, plus our suggestions, to help you optimize your DAF while partnering with TheNewClimate.

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What is a Donor-Advised Fund (DAF)?

A Donor-Advised Fund (DAF) is essentially a charitable investment account that allows individuals, families, or organizations to donate money, stocks, crypto, or other assets to a sponsoring organization (like Fidelity Charitable, Vanguard Charitable, National Philanthropic Trust, community foundations, or faith-based nonprofits). You receive tax benefits and the assets are invested tax-free while you recommend grants. Unlike traditional foundations, DAFs aren't required to spend down; funds can flow in and out over time, making them a flexible tool for long-term impact.

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By directing grants from your DAF to TheNewClimate, you can support innovative solutions at the intersection of climate and national security, ensuring your capital creates lasting public good.nptrust.org

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Does the money in my DAF account just sit there, as is often reported in the news?

No—contrary to media myths, DAFs are active. Payout rates hover around 24% annually (23.9% in 2023), far exceeding private foundations' 5% minimum. Total grants hit $54.77B in 2023 from $251.52B in assets, showing steady deployment. Funds must ultimately support the public good. Direct yours strategically to TheNewClimate to accelerate climate and security impact.

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How do I know if my DAF sponsor is good fit for me?​

Evaluate based on fees, investment options, grant flexibility, and alignment with your values. National sponsors like Fidelity offer low costs and tech ease; community foundations provide local expertise; single-issue ones focus on missions like faith or environment. Check payout rates, customer service, and tools for impact tracking. If it supports capital stacking, even better—consult TheNewClimate for guidance on sponsors that enable high-impact grants.

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Can I switch DAF Sponsors?

Yes, easily—recommend a grant from your current DAF to a new one, transferring assets tax-free. No penalties, but confirm both sponsors allow it (most do). It's like any grant request. Switch for better fees or alignment; TheNewClimate can advise on sponsors optimal for climate/security stacking.

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Who are the legal authorities for DAF Sponsors?

The IRS oversees DAFs under IRC Section 4966, requiring sponsors to be 501(c)(3) charities. They must ensure grants go to qualified nonprofits, with "expenditure responsibility" for complex uses. State attorneys general may regulate too. Proposed regs clarify definitions—stay compliant by working with intermediaries like TheNewClimate for stacking.irs.govnonprofitlawblog.com

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What kind of DAF sponsors are there?

Three main types: National (commercial, e.g., Fidelity—low fees, broad reach); Community Foundations (local focus, expertise); Single-Issue (mission-driven, e.g., faith-based or environmental). In 2023, Nationals held 69% of assets but lower payouts (22.8%) vs. single-issue (34.2%). Choose based on goals; TheNewClimate partners with various for climate impact.ncfp.orgnptrust.org​

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How can I be strategic with my DAF?

Layer grants for "capital stacking"—non-dilutive funding atop VC to derisk startups (e.g., equipment buys). Time donations for tax wins, recommend impact investments. Partner with TheNewClimate for compliant, high-ROI grants in climate/security, amid waning federal support.

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How does my investment advisor work with my DAF sponsor?

Advisors can manage DAF assets if the sponsor allows (e.g., customize portfolios for ESG). They collaborate on recommendations, but sponsor oversees. This grows funds for grants—direct to TheNewClimate to align with your VC portfolio.

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When should I dump my DAF Sponsor?

In the words from ABBA, breaking up is never easy... Switch if fees are high, service is poor, investments limited, or values misalign (e.g., no impact options). Also, if better tech or expertise elsewhere. It's simple via grant transfer—no drama. TheNewClimate can help evaluate and transition for optimal stacking.

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​Can my DAF have a legacy?

If you don't specifically name successors or set a distribution plan the sponsor may grant to a party of their choosing, and some choose to grant to themselves. Plan ahead—include TheNewClimate for enduring climate/security legacy.

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How do I get started?

  1. Review your DAF portal.

  2. Identify impact areas.

  3. Grant to TheNewClimate: contact@thenewclimate.org.

  4. Leverage for stacking.

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Data Sources

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Contact contact@thenewclimate.org to transform your DAF.

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