What Budget Cuts Means for DAFs

Across the country, nonprofits are bracing and scrambling. The federal budget and recent budget adjustments included sweeping cuts to social services, public education, scientific research, the arts, and more. From cancelled NSF grants to revoked NEA funding, nonprofit organizations are seeing contracts withdrawn and previously reliable public dollars vanish.

The Chronicle of Philanthropy recently reported a surge in nonprofit emergency appeals as organizations brace for funding shortfalls. Inside Philanthropy highlights the growing call for private funders to "step into the breach" as state and federal dollars diminish. 

This moment presents both an opportunity and a challenge for donor-advised fund (DAF) holders and their advisors. 

Here are Daffodil’s three recommendations:

1. DAFs Offer Flexibility. Use It.

Unlike foundations or government entities, DAFs don’t require a lengthy approval process to deploy funds. With funding needs spiking across nearly every mission area, now is the time to lean into the agility of your DAF.

Whether it’s a public college facing cancelled research dollars or an after-school program losing a government grant, DAF holders can respond in real-time, with targeted support. Many donors are already asking: “Where will my dollars matter most this year?” This is your chance to act, quickly and intentionally.

2. Bridge the Gap,  Strategically.

Not every nonprofit needs a permanent replacement for government funding. Some need a bridge to provide support for critical programs while they seek new sources. Others may need multi-year commitments to reimagine delivery models entirely. You can tailor your giving to provide stopgap dollars or structural support. 

3. Consider Underfunded Fields.

Scientific research. Mental health. Housing. Rural arts programs. These sectors are often underfunded in private philanthropy, but they’re some of the hardest hit by federal cuts. If you hold a DAF, this is an opportunity to look beyond your usual portfolio.

Think of your giving as a lever. In the absence of public investment, donor capital can protect access and innovation.

Government budget adjustments aren’t new,  but this year’s scale is unusual. Donors and advisors have a chance to respond not just with generosity, but with foresight. If you hold a donor-advised fund, now is the time to ask: How can my dollars go further, and what kind of impact do I want that to have?

At Daffodil, we’re committed to making those answers easier. respond to this message to explore giving strategies with lasting value.