Beyond the Gala: Donor advised funds and charitable events
Charity galas, fundraising dinners, golf tournaments and other events are powerful ways to bring communities together around a shared mission.
For the philanthropically inclined, donor advised funds (DAFs) can be an effective way to support nonprofit fundraising events and charitable initiatives. When using a DAF in connection with an event the key is to ensure donations are structured in a permissible manner, as DAF grants cannot be used to cover portions of an event that provide a personal benefit to the donor.
How you can use DAF funds to support nonprofit events
Charitable events can be a common area of confusion for DAF givers. Many donors assume that because an event benefits a nonprofit organization, all related expenses qualify for DAF support.
A DAF is a charitable giving account that allows donors to contribute assets, receive an immediate tax reduction and recommend grants to qualified nonprofit organizations. Since contributions into a DAF are fully tax-deductible, grants out of a DAF must also be for fully tax-deductible purposes, meaning the donor cannot receive any personal benefit, per IRS rules.
A simple approach for donors to determine what a DAF can and cannot be used for is to separate gifts that provide some kind of personal benefit from general charitable support.
DAFs can be used for these types of charity event purposes:
- General funding to put on the event
- Fund-a-need donations (without donor benefits)
- Paddle raise moments (without donor benefits)
- General donations to the charity during or after the event
DAFs cannot be used for these types of charity event purposes:
- Auction items or raffle entries
- Event and gala tickets
- Fundraising dinner tickets
- Golf tournament registration fees
- Sponsorship packages with event benefits
- VIP access or reserved seating tickets
- Entertainment-related costs
Using DAFs to extend the impact of charitable events
Events have the power to create moments of inspiration and connection between people. They also give donors a chance to hear directly from nonprofits and leaders about urgent needs while being able to see the impact charitable dollars can make in action. When used thoughtfully, a DAF can help donors turn the momentum of a charitable event into deeper mission support.
A donor may pay personally for a gala ticket or golf tournament registration, then recommend a separate DAF grant to support the nonprofit’s programs, operations or fund-a-need appeal. This separation can be powerful. It can help keep giving compliant and offer donors flexibility to support the organization before the event, respond to a compelling appeal during the event or make a thoughtful follow-up grant afterward.
Nonprofits can also encourage this type of separated giving by clearly identifying opportunities that are appropriate for DAF support and do not provide benefits to the donor. By making these options clear, donors can give with confidence while strengthening long-term philanthropic relationships.
Key takeaways
- DAFs are an effective way to support nonprofit events, so long as it is done in a permissible manner without any personal benefits associated with the gift.
- For donations like paddle-raise moments or fund-a-need initiatives, DAFs are a great, effective tool to use for those types of general donations.
- For donations that provide a personal benefit – such as tickets or auction items, it’s best to pay for those personally, not from the DAF.
- Clear planning and donor education help ensure charitable giving remains both impactful and compliant