Donor Advised Funds (DAF)

Donor Advised Funds (DAF)

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.