Donor Advised Fund

Donor-Advised Fund, or DAF, is a private giving account administered by a public charity for the purpose of managing donations on behalf of an individual, family, or organization. It allows donors to make charitable contributions of cash, securities, or other assets to a public charitable investment account, receive immediate tax deductions, and then recommend grants from the fund to other 501(c)(3) organizations.

Donations of long-term appreciated assets to the DAF can maximize tax benefits and eliminate capital gains. Your donation to a DAF may be invested for tax-free growth. It is important to note, however that once the money goes into the DAF it can only come out as recommended gifts to 501(c)(3) organizations. No tangible benefits are allowed.

It is easy to include your DAF within your estate plan. Simply notify your DAF manager and make a bequest in your will directing assets in the fund to select non-profit organizations. You may also decide to appoint a successor(s) to continue the legacy plan you established with your DAF.

Donor-advised fund sponsors include national donor-advised fund organizations, Community Foundations, faith-based organizations, and public foundations.

Example: John and Betty Garland are long-time supporters of The Shelter for Abused Women & Children. In 2018 they decided to simplify their charitable giving plans and transferred appreciated stock to a donor-advised fund at Fidelity. They continue to make additional gifts of stock to the DAF.

John and Betty continue to recommend substantial unrestricted gifts to The Shelter each year from their DAF. They recently notified The Shelter that it is included among other non-profits in their estate plans for sunsetting their DAF.