Donor Advised Funds

What is a donor advised fund, or “DAF”? A DAF is a philanthropic vehicle that allows donors to make charitable contributions, receive immediate tax benefits, and recommend grants from the fund over time to various charities of their choice. Here’s how it typically works:

1. Contribution to Fund: Donors contribute cash, securities, or other assets to a donor-advised fund sponsored by a public charity. They can then claim a tax deduction in the year the contribution is made.

2. Tax Benefits: The contributions are typically tax-deductible in the year they are made. For securities and other appreciated assets, the donor also generally avoids paying capital gains tax.

3. Investment Growth: The contributions in the DAF can be invested based on options provided by the sponsoring organization and can grow tax-free, potentially increasing the amount available for future charitable grants.

4. Grant Recommendations: Donors can advise the sponsoring organization on how to distribute the funds to eligible charities. While these recommendations are not legally binding, they are generally followed by the sponsoring organization.

5. Flexibility and Control: Donors can recommend grants at their own pace, without the immediate requirement to distribute the funds. This allows them to plan their charitable giving strategically.

DAFs are popular due to their simplicity, tax efficiency, and the flexibility they offer in managing charitable donations. They are often used by individuals, families, or corporations looking to establish a structured giving strategy without the administrative responsibilities of managing a private foundation.

For more information about giving through your DAF, email sbwarren46@gmail.com.