Usage Guidelines

DAFpay legal restrictions and considerations

When using DAFpay for your nonprofit’s fundraising, it’s important to understand and comply with key legal limitations tied to Donor Advised Funds (DAFs). DAF grants cannot provide more than an incidental benefit to the donor, and there are specific restrictions nonprofits must be aware of.

See DAF Gift Acceptance Guidelines

---

📓 Legal Limitations

1

No Personal Benefit

DAF funds cannot be used for transactions that result in a personal benefit to the donor. This includes gala or event tickets, items at charity auctions, goods or services of any kind)

2

No Political Activity

DAF contributions cannot be used for lobbying efforts, political campaigns, or support of political candidates

3

Pledge Fulfillent (Allowed With Conditions)

DAF funds can be used to fulfill a personal pledge as long as the DAF sponsor does not mention the pledge in the grant letter or check. This clarification is outlined in Section 4 of IRS Notice 2017-73.

---

💼 How DAFpay Handles Gifts

All donations through DAFpay are treated as unrestricted gifts when initiated.

However, nonprofits can infer gift purpose from donor-provided notes and the placement of the DAFpay tool, such as on a specific campaign page. DAFpay also encourages donors to include their name and contact information (most do), enabling nonprofits to follow up and confirm gift designations when needed.

---

📝 Staying Compliant

At Chariot, we stay informed on legal and regulatory updates related to DAFs and keep our partners in the loop.

That said, each nonprofit is responsible for its own compliance, and we strongly recommend consulting with legal and tax professionals to navigate DAF-related regulations effectively.