Contributed by: Nicholas Brown, CFA, CFP®
Donor Advised Funds (DAFs) have long been a cornerstone of charitable giving strategies for families and individuals who value both philanthropy and tax efficiency. At Granite Harbor Advisors, we’ve previously written about how DAFs can be used as a flexible vehicle for managing charitable contributions, especially in high-income years or as part of a long-term estate planning strategy. But what happens when your current DAF sponsor is no longer the right fit?
Whether due to service limitations, investment options, fee structures, or simply the desire for greater alignment with your philanthropic goals, transferring a Donor Advised Fund from one sponsoring organization to another is a process that can be completed with care and precision—though not without some nuance. This article focuses on that transfer process, what to expect, and how to ensure a smooth transition.
Understanding the Role of the DAF Sponsor
Before diving into the logistics of a transfer, it’s important to clarify what a sponsoring organization does. DAFs are not standalone accounts; they are administered by a public charity (the sponsor), which manages the funds, processes grant recommendations, handles compliance, and oversees the investment of the assets, commonly through an Investment Advisor the original donor has hired.
Common sponsors include large national charities, financial institution-affiliated foundations, community foundations, and independent nonprofits. Each brings its own set of rules, investment offerings, administrative fees, and philanthropic support services.
Many donors set up a DAF without fully appreciating the long-term implications of their sponsor selection. As your giving strategy evolves, it’s entirely reasonable to find that your current sponsor or investment advisor no longer meets your needs. The good news is that transferring your DAF is possible in many cases—but it requires thoughtful planning.
DAF Transfers vs. Brokerage Account Transfers
At first glance, the concept of transferring a DAF may seem similar to transferring a brokerage account from one custodian to another. But the two processes are fundamentally different.
A brokerage account transfer is a custodial change. You retain ownership of the assets, and the receiving institution simply assumes responsibility for holding and servicing your account. Assets typically transfer in-kind—meaning you maintain your investments without selling them—and the process is governed by standard account transfer procedures, such as an Automated Customer Account Transfer (ACAT).
In contrast, Donor Advised Funds are irrevocable charitable gifts. Once you contribute to a DAF, those assets legally belong to the sponsoring public charity. You retain advisory privileges—not ownership. Because of this, there is no custodial transfer mechanism like ACAT available. Instead, you must request that your current DAF sponsor make a grant of the entire balance to the new sponsor’s DAF program. This distinction changes both the structure and expectations of the transfer.
The key differences include:
- Legal Ownership: Brokerage assets remain yours; DAF assets are owned by the sponsoring charity.
- Transfer Mechanics: Brokerage accounts transfer through a formal custodial process; DAFs require a grant recommendation from one public charity to another.
- Asset Movement: Brokerage transfers can preserve asset positions; DAF transfers typically involve liquidation and re-contribution in cash.
- Timing and Control: Brokerage transfers follow regulated timelines; DAF transfers are at the discretion of the sponsor, and timing can vary significantly.
This distinction is not just procedural—it underscores the importance of strategic planning and professional oversight when initiating a DAF transfer. Unlike a brokerage transfer, which is often mechanical, a DAF transfer may involve coordination between multiple nonprofit entities and additional documentation to ensure compliance with each sponsor’s policies.
The Transfer Process Step by Step
1. Research and Select a New Sponsor
The first step is identifying a new DAF sponsor that better meets your needs. This may include:
- Broader investment options, including access to private market strategies
- More customized or values-aligned grantmaking support
- Lower fees or more transparent pricing
- Greater flexibility in succession planning or multi-generational involvement
Granite Harbor’s previous article on Structuring Donor Advised Funds for Maximum Impact explores these topics in greater depth. Many DAF sponsors specifically work with Investment Advisers such as Granite Harbor Advisors, so your new or existing investment adviser is a great place to start when considering a change to your DAF.
2. Establish the New DAF
Before initiating a transfer, you must establish the new DAF at your chosen sponsor. This includes completing the necessary application and funding instructions so that the incoming sponsor is ready to receive the assets.
3. Request a Full Grant Recommendation
You will then submit a recommendation to your current sponsor to grant the entire balance of your DAF to the new sponsor. Depending on the provider, this may require a written request, a specific form, or an online submission. It's important to clearly state the name and EIN of the new sponsoring charity, and in some cases, include instructions for how the funds should be directed into your newly established account.
4. Confirm and Document the Grant
Once the grant is approved, the original sponsor will send a check or wire to the new sponsor, who then deposits it into your newly established DAF. You should receive confirmation from both parties, including final account statements and opening balances.
5. Re-establish Investment and Grantmaking Preferences
With the new DAF in place, you can re-select your investment preferences—potentially gaining access to more customized portfolios, including private equity, real estate, or ESG strategies. You can also update your grantmaking preferences and succession plans to reflect your current goals and family values.
Things to Watch For
Although the process is relatively straightforward, there are several points of caution:
- Processing Delays: Transfers can take several weeks depending on the internal processing times of each sponsor.
- Loss of Historical Grant Data: Your grant history may not carry over to the new DAF. If tracking long-term impact is important to you, be sure to download and save prior records.
- Restrictions from Current Sponsors: Some institutions discourage DAF-to-DAF transfers and may create procedural friction, such as requiring special approval or placing limits on transfer frequency.
- Minimum Grant Amounts: Some sponsors enforce minimum grant thresholds that could make a full transfer impractical for smaller DAFs.
This is why working with a professional advisor is key. At Granite Harbor Advisors, we guide our clients through this process from start to finish, coordinating efforts across custodians and helping avoid administrative missteps that can delay or jeopardize a successful transfer.
Why Transfer? A Brief Note on the Benefits
While this article centers on the how of transferring a DAF, it’s worth briefly mentioning the why.
Some clients initially established a DAF with a national provider simply because it was convenient—part of their existing bank or brokerage relationship. But as their giving strategy becomes more intentional, they find that provider’s offerings too limited or impersonal. Others are seeking more sophisticated investment options or desire a values-aligned partner who can support more complex giving strategies, such as charitable trusts or blended gifts involving appreciated private business interests.
Final Thoughts
Transferring a Donor Advised Fund is not a decision to take lightly, but it is often the right one for donors seeking greater flexibility, alignment, and support in their charitable efforts. By understanding the mechanics of the process—and how it differs from more familiar financial transfers—you can avoid surprises and make more confident decisions.
At Granite Harbor Advisors, we don’t just manage assets; we steward purpose. If your DAF is no longer serving you as effectively as it could, it may be time to consider a change. Our team is ready to help you evaluate your current provider, facilitate the transfer, and build a philanthropic strategy that aligns with your broader financial goals.
For additional insights, we encourage you to explore our related articles on charitable giving and Donor Advised Funds, available on the Granite Harbor Advisors website.