Donor-Advised Fund organizations are 501(c)(3) public charities.
What Is A Donor Advised Fund?
A donor‐advised fund (DAF) provides donors with a centralized charitable account. It allows individuals, families, and businesses to make an irrevocable gift to a public charity that sponsors a DAF and take an immediate tax deduction. Most DAFs accept cash equivalents, securities, and other assets.
How Does A Donor-Advised Fund Work?
Donors make a tax‐deductible contribution of cash, long‐term appreciated securities, irrevocable or other assets to a charity that sponsors a DAF program. The program then establishes an account in the donor’s name. DAF donors may choose from a variety of investment options, and proceeds are put into an account from which donors may make grant recommendations.
Why Choose A Donor-Advised Fund?
Simplicity – The DAF sponsor handles all record‐keeping, disbursements, and tax receipts.
Flexibility – The timing of your tax deduction can be separate from your charitable decision-making.
Tax‐efficiency – Contributions are immediately tax‐deductible, and any investment growth in the DAF is tax‐free. Donating long-term appreciated securities is easy, 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, minimum initial charitable contributions often exist 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.
Anonymity – Donors may choose to remain anonymous to the grant recipient.
(Attributed to DAFDirect.org)