What is a donor advised fund (DAF)?

A DAF allows donors to create a centralized fund from which to make charitable contributions, receive immediate tax deductions, and then recommend grants to their favorite charities whenever they like or to create an automated schedule of giving.

How does it work?The donor makes an irrevocable contribution of personal assets, including cash, stock, real estate, etc.

The donor names the donor-advised fund account, advisors, and any successors or charitable beneficiaries.

At any time afterward, the donor can recommend grants from their account to qualified charities.

Advantages of using a donor advised fund:

Simplicity — The DAF sponsor handles all recordkeeping, disbursements, and tax receipts for the donor.

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 several 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.