Building A Climate Tech Legacy Using Donor-Advised Funds

New funding models are emerging to support innovation in climate technology. While venture capital and government programs have historically driven much of the sector’s growth, philanthropic tools like donor-advised funds (DAFs) are increasingly influencing how climate solutions are financed. According to the National Philanthropic Trust, assets held in DAFs have grown significantly in recent years, creating a substantial pool of capital that donors can direct toward environmental and climate initiatives.

As donors look for ways to align their philanthropy with long-term environmental goals, many are using DAFs to support nonprofits, climate research, and emerging technologies designed to reduce greenhouse gas emissions.

A donor-advised fund is a charitable giving account managed by a sponsoring organization, such as a financial institution or community foundation. Donors contribute cash or appreciated assets, receive an immediate tax deduction, and then recommend grants to nonprofit organizations over time.

This structure provides flexibility that traditional charitable giving often lacks. Instead of distributing donations immediately, assets can remain invested within the fund and potentially grow, allowing donors to increase their long-term philanthropic impact.

DAFs have grown rapidly over the past decade. According to The Chronicle of Philanthropy, assets in donor-advised funds reached roughly $326 billion in 2024, with tens of billions distributed to charities annually. This growth has made DAFs an increasingly influential force in philanthropic funding.

Climate technology, commonly known as climate tech, refers to innovations designed to reduce greenhouse gas emissions or help societies adapt to environmental change. The sector includes renewable energy systems, carbon-removal technologies, sustainable materials, climate data platforms, and resilient infrastructure.

Although climate tech investment surged in the past decade, funding cycles can fluctuate with economic conditions and policy changes. Nevertheless, investment in climate innovation continues to attract attention from investors and institutions alike. For example, venture firm Volo Earth recently raised a climate-focused investment fund to support early-stage environmental technologies, according to The Wall Street Journal.

In this environment, philanthropic capital can help bridge funding gaps, particularly for early-stage technologies that require long development timelines before reaching commercial viability.

One of the most notable developments in a DAF can be the growing interest in using philanthropic capital for impact investments. Instead of sitting in traditional portfolios, some donor-advised fund assets are being directed toward mission-driven enterprises and environmental solutions.

Programs such as RSF Social Finance’s Double Impact Donor-Advised Fund allow donors to invest unused DAF assets into social enterprises addressing environmental and community challenges. During its pilot phase, approximately $16 million in DAF assets were invested in impact-driven ventures.

Environmental initiatives are also emerging within philanthropic networks. For example, One Percent for the Planet’s Planet Impact Fund helps donors align their charitable investments with companies focused on sustainability and climate solutions.

These initiatives can reflect a broader shift toward “impact philanthropy,” where charitable capital is used not only for grants but also to support investments that generate measurable environmental outcomes.

As climate risks continue to grow, philanthropic funding will likely play an increasingly important role in supporting technological solutions. According to Climate Works Foundation, donor-advised funds offer a flexible and tax-efficient way for individuals and families to contribute to climate innovation while building a long-term charitable legacy.

By combining strategic grantmaking with impact investing, donors can direct capital toward organizations and technologies working to address one of the world’s most pressing challenges, as per Climate Reality Project. In a sector where early-stage research and experimentation often struggle to attract traditional funding, philanthropic capital from donor-advised funds can help accelerate the development of solutions that shape a more sustainable future.