The Donor-Advised Fund (DAF) is the fastest-growing charitable vehicle in the United States today. That's because it offers excellent tax saving options, provides great flexibility, and distributions can be completely anonymous.
This tool is also great for turning complex assets, such as real estate, business interests, or oil & gas, into tax-efficient funding for your favorite ministries that may not be able to accept these types of gifts directly.
How a Donor-Advised Fund Works
- You make an initial, irrevocable gift of cash, stock, or a complex asset to fund a DAF at a brokerage firm, community foundation, mutual fund company, or Christian organization.
- You receive an immediate tax deduction for your gift.
- The assets in your DAF can grow tax-free, either by money-market returns or selecting to have the funds invested.
- On your advisement, grants are sent to your favorite ministries whenever you like, with no annual requirement or minimum distribution from the fund.
Benefits of a Donor-Advised Fund
- Establish an easy and flexible vehicle for charitable giving
- Maximize your gift by taking advantage of the tax-avoiding ways to give using a DAF
- Make an immediate gift to receive a tax deduction in the current year, and have the option to distribute the funds later
- Support multiple charities while receiving a single receipt at the time you fund your DAF
- You can add additional advisors to your DAF to create a legacy fund that your children can make grants from for years to come
Donor-Advised Funds vs. Private Foundations
A Donor-Advised Fund has several advantages when compared to a private foundation. The start-up time and cost are minimal for DAFs, and gifts to DAFs are generally deductible at fair market value. A DAF is also not subject to the distribution requirements and certain excise taxes faced by private foundation. Additionally, grants made through a DAF can be completely anonymous.
If you have any questions about Donor-Advised Funds, please contact our experienced Planned Giving team to learn more, at:
800-782-8227 or FocusPlannedGiving@fotf.org