Donor-Advised Funds (DAFs) offer a flexible and strategic way to support the causes you care about over the long term.
What is a Donor-Advised fund?
A DAF is a charitable giving account that allows you to contribute assets, receive an immediate tax deduction, and distribute funds to charities over time. This structure can be especially helpful if you want to plan your giving intentionally.
Here are a few key advantages of using a Donor-Advised Fund:
- Ability to donate complex assets
DAFs can typically accept complex gifts, such as shares of a closely held business, appreciated securities, or other non-cash assets. If the charity cannot receive a gift directly, you can donate the asset to your DAF instead. The fund can liquidate the assets and distribute the proceeds to the charity (or multiple charities) of your choice.
- Opportunity to invest your charitable dollars
Money inside a DAF can be invested before it’s donated, and it will grow tax-free. Many sponsors offer impact-focused investment options. These investments can potentially grow your charitable pool, allowing you to give more over time. If the investments lose value, the loss occurs on funds you’ve already committed to charity.
If you are looking for a structured, tax-efficient, and scalable way to support the causes that mean the most to you, donor-advised funds may be an excellent option.
Other advantages:
- The DAF sponsor handles recordkeeping, grant processing, and tax reporting, simplifying your giving.
- You can name successors in your DAF.
- There is no required payout schedule or minimum annual distribution requirement, giving you full flexibility in how and when you give.
- You will receive only one tax receipt for your contribution to the DAF, so you won’t have to track multiple gift receipts throughout the year.
