Donor Advised Funds: A Simple Guide to Making a Difference

In today’s world, giving back to the community and supporting charitable causes has become increasingly important to many individuals. Donor Advised Funds (DAFs) offer a convenient and flexible way for people to engage in philanthropy. If you are unfamiliar with DAFs, don’t worry–we’ll break it down for you in simple terms.

What is a Donor Advised Fund?

A Donor Advised Fund is a charitable giving account established by a donor in partnership with a financial institution or a community foundation, such as National Charitable Fund, Inc. Think of it as a charitable savings account with a twist– instead of keeping your money for personal use, you donate it to your DAF, where it is then invested and can grow tax-free.

How Does it Work?

  1. Create Your Fund: You start by opening a DAF account and funding it with various assets, such as cash, stocks, or real estate.
  2. Tax Benefits: When you make a contribution to your DAF, you receive a tax deduction for the calendar year in which the contribution was made. That money will be held in your account until you decided to distribute the funds to qualifying non-profits.
  3. Grow Your Giving: The money in your DAF can be invested*, potentially growing over time. This means more funds available for charitable giving.
  4. Recommend Grants: As the donor, you become an advisor to your DAF. You can recommend grants to eligible charities of your choice at any time. This allows you to support the causes that matter most to you. If you wish, you may also maintain your privacy, as the grants are made in the name of the fund, not your personal name.

Why Choose a Donor Advised Fund?

DAFs offer several benefits that make them appealing to donors:

  • Simplicity : Setting up and managing a DAF is straightforward, requires minimal paperwork and can be done quickly.
  • Flexibility: You have the flexibility to donate to charities when you are ready. If you know of an area of interest you would like to support, our advisors can help you vet potential non-profits and give you recommendations of worthy organizations.
  • Impactful Giving: Your DAF can be a strategic tool for long-term giving, allowing you to plan your philanthropy and support charitable causes over time.
  • Family Involvement: Your fund can be used as an opportunity to involve your family, instilling a spirit of giving and passing down charitable values to future generations.

With a Donor Advised Fund, you can make a lasting impact on the causes you care most about, making the world a better place one donation at a time. Contact us to set up a fund today!