In philanthropy, two tools are often confused: Donor-Advised Funds (DAFs) and Fiscally Sponsored Projects (FSPs). Though these sound seemingly interchangeable upon first glance, DAFs and FSPs serve very different purposes.

Below, we’ve outlined a simple way to think about them: 

Donor-Advised Funds (DAFs) 

Think of a DAF as a charitable wallet for donors.

What it is: An account set up at a sponsoring nonprofit organization (like Rockefeller Philanthropy Advisors, Schwab Charitable, or a community foundation). 

How it works: The donor makes a charitable donation to the DAF, gets the tax deduction immediately, and then advises (recommends) grants to other nonprofits or organizations. However, the sponsoring organization legally owns and controls the assets. 

Who it’s for: Donors who want a flexible and easy way to give without setting up a private foundation. 

Example: Maria sells her company and puts $1M in a DAF at Rockefeller Philanthropy Advisors. She then recommends $100K grants to different climate nonprofits or charitable causes over time. 

What it is NOT 

• A private foundation — donors can’t hire staff, run their own programs, or control the money once contributed. 

• A personal bank account — funds legally belong to the sponsoring organization, not the donor. 

• For personal benefit — no grants can go to individuals, businesses, or anything that benefits the donor. 

Fiscally Sponsored Projects (FSPs) 

Think of an FSP loosely as a resident program under a shared nonprofit home.

What it is: A project or program hosted under an existing nonprofit that serves as a fiscal sponsor — usually a 501(c)(3) legal and administrative umbrella. 

How it works: The sponsor handles finances, HR, and compliance, while the project team runs the program. 

Who it’s for: Initiatives or movements that want to operate charitable programs without forming a new nonprofit entity. 

Example: A group of activists launches a climate education campaign under a fiscal sponsor. The sponsor manages the money; the team runs workshops in schools. 

What it is NOT 

• Your own 501(c)(3) — the sponsor is the legal nonprofit, not the project. 

• A free pass to operate without oversight — the sponsor has a fiduciary duty and legal control, and the project must remain accountable to the sponsor’s policies and standards. 

• An “admin back office” — sponsorship is a legal and compliance relationship, not just bookkeeping. 

• The same as a DAF — unlike DAFs, FSPs can run programs and even make grants, but always under the sponsor’s authority. 

In Summary: 

DAFs are about giving — they serve as a charitable giving account for donors. FSPs are about doing — they offer an operating structure that allows programs to run under an existing nonprofit’s umbrella. When deciding between the two, consider which one best fits your needs: Are you looking for a tool to streamline your giving, or a structure to run your project? 

Both Donor-Advised Funds (DAFs) and Fiscally Sponsored Projects (FSPs) are most widely practiced in the United States, where regulations and nonprofit infrastructure strongly support them. If you’re a donor, you can open a DAF through a community foundation, a financial institution (like Fidelity Charitable or Schwab), or a mission-driven sponsor like RPA, which also operates FSPs. If you’re a project leader or donor wanting to launch an initiative, fiscal sponsors like RPA provide platforms to host programs or regranting funds. Outside the U.S., availability may be limited, but similar models are emerging in Canada, the UK, Europe, and parts of Asia, often through community foundations or incubator-style nonprofits.  

Always check the legal and tax context where you operate to find the right fit.

This article was originally published in PhilanTrack, a substack dedicated to exploring the intersection of philanthropy, economic policies, finance, technology, and development. Subscribe here.