What is a DAF?
A donor-advised fund (DAF) is a centralized charitable account. It is a simple, tax smart investment account that allows you 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, an initial minimum charitable contribution is often required to establish a 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.