Alternative investments have spent the past decade rising from niche to necessary. With global alternative-asset AUM now reaching an estimated $22 trillion, representing roughly 15% of global investable assets (CAIA), it’s no surprise the category carries significant industry mindshare. And momentum remains strong: research from WealthManagement.com estimates that alts distributed through wealth-management channels alone could grow to nearly $3 trillion by 2029.
Scale, distribution infrastructure, and mature product ecosystems all help explain why advisors devote so much attention to alternatives.
But while alternatives continue to expand, another trend is accelerating under the surface, one that could have an equal, if not greater, impact on advisor-led growth:
The rapid rise of modern donor-advised funds (DAFs).
According to the National Philanthropic Trust’s 2024 DAF Report, DAFs now hold over $228 billion in charitable assets, after more than a decade of sustained double-digit annual growth. Many in the industry expect this trajectory to continue, with DAF assets widely projected to surpass $1 trillion within the next decade, driven by demographic shifts, tax planning needs, and a generational preference for values-driven wealth strategies.
And yet, while alternatives dominate conferences and research agendas, DAFs are still under-discussed relative to their strategic potential.
But this isn’t a story of competition. It’s a story of convergence.
Where These Trends Meet
Alternatives and DAFs operate at different scales and serve different purposes, but they reinforce one another in ways that matter deeply to advisors.
Alternatives bring diversification, yield, and portfolio sophistication. DAFs bring tax strategy, multi-generational engagement, and deeper client relationships.
Put together, they allow advisors to deliver performance-driven portfolio construction, and purpose-driven wealth planning without forcing clients to prioritize one over the other.
This is where the modern DAF changes the narrative. Today’s DAFs are not static charitable buckets. They can hold advisor-managed portfolios, integrate alternatives, and serve as part of a holistic tax strategy that keeps assets guided by the advisor rather than flowing to external providers.
It’s no longer about choosing between growth stories. It’s about recognizing that the two are mutually reinforcing.
The Best of Both Worlds
Advisors increasingly see the advantages of aligning alternatives with charitable planning:
- Alternatives inside a DAF allow clients to invest in line with their long-term purpose.
- Tax-efficient charitable contributions create more capacity for strategic allocation.
- Multi-generational philanthropy keeps family members connected to both the advisor and the investment philosophy.
Alternatives strengthen what’s in the portfolio. DAFs strengthen the relationship that surrounds it. Together, they create a more durable advisory connection, one that can withstand market cycles, generational transitions, and shifting client expectations.
The Bottom Line
Alternatives have earned their industry spotlight. They’re large, growing, and backed by significant distribution resources. DAFs, meanwhile, are one of the fastest-rising and most client-aligned planning tools available.
But the advisors who win the next phase of growth won’t be choosing between the two. They’ll be combining them. Integrating alternatives into modern DAF strategies. Leveraging tax efficiency and values-based planning to deepen relationships, and creating a portfolio and philanthropy model that puts them at the center of a client’s financial and family legacy.
The future isn’t either/or. It’s both.