What is a Donor-Advised Fund?
How does it work?
What are the main advantages of a donor-advised fund?
** Sponsoring organizations generally assess an administrative fee on the assets in a DAF. These fees vary by sponsoring organization.
- A Donor-Advised Fund (DAF) is a type of giving program that allows you to combine the most favorable tax benefits with the flexibility to easily support your favorite charities.
- An increasingly popular charitable vehicle, DAFs are an excellent way to both simplify your charitable giving and facilitate your strategic philanthropic goals.
How does it work?
- Establish your DAF by making an irrevocable, tax-deductible donation to a public charity that sponsors a DAF program
- Advise the investment allocation of the donated assets (any investment growth is tax-free)
- Recommend grants to qualified public charities of your choice
What are the main advantages of a donor-advised fund?
- Simplicity – The DAF sponsor handles all record-keeping, disbursements, and tax receipts.
- Flexibility – Timing of your tax deduction can be separate from your charitable decision making.
- Tax-efficiency – Contributions are tax-deductible and any investment growth in the DAF is tax-free. It is
- also easy to donate long term appreciated securities, eliminating capital gains taxes and allowing you to support multiple charities from one block of stock.
- Family legacy – A DAF is a powerful way to build or continue a tradition of family philanthropy.
- No start-up costs – There is no cost to establish a donor-advised fund. However, there are often
- minimum initial charitable contributions to establish the DAF (typically $5,000 or more).**
- No transaction fees – Once approved, 100% of your recommended grant goes to your qualified public charity of choice.**
- Privacy if desired – Donors may choose to remain anonymous to the grant recipient.
** Sponsoring organizations generally assess an administrative fee on the assets in a DAF. These fees vary by sponsoring organization.