If you have a donor-advised fund (DAF), this article will show you how to align the investment strategy of your DAF with your intended giving strategy to dramatically increase the overall impact while staying “on-mission.”

Many people establish a DAF with the strategy to grow their capital for a future gift – an admirable goal. But did you know that you can enjoy many years of impact while growing your capital on the same mission that you will later give to?

Here’s an example of multiplying the impact of your DAF by investing “on-mission”:

Here’s an example of how this works: If your passion is combating human trafficking, you can grow your capital in impact funds such as the Eagle Freedom Fund, a venture capital fund that invests in technology companies that are directly fighting human trafficking. After the companies in that fund sell, you can give the proceeds from profitably fighting trafficking to nonprofits fighting trafficking to magnify your impact.

Here’s an example of how investing a DAF in Eagle Freedom Fund would look:

Here’s another example: let’s say your passion is the flourishing of the most vulnerable people in Dallas/Fort Worth. In that case, you might be interested in investing in impact funds with that focus, such as the Eagle City Fund Dallas, a venture capital fund that invests in technology companies dedicated to the flourishing of the most vulnerable people in DFW. After those investments exit, again, you can now donate those proceeds to more projects for the flourishing of the city!

If your passion is poverty in Africa, you might invest in Talanton to create jobs or Fortis Green for power stability in Africa. After the investment grows, you can give the fruit of job creation in Africa for additional projects for the flourishing of Africa!

Our friends at The Impact Foundation created this graphic to show how the process works:

While the Impact Foundation specializes in impact investments, we can work with many other DAF providers, including WaterStone, TrustBridge, National Christian Foundation, and The Signatry.

There are no "free lunches" in the world of finance, but some things – like diversifying your investments, and growing your DAF on the same mission you'll give it to – just make sense.

Note: Many impact investment funds are illiquid and all investments take risks that could result in the loss of some or all of your investment.