Donor-Advised Funds Made Simple

A donor-advised fund, as known as a DAF, can be a tax-efficient way to give to charity. A DAF is basically a charitable investment account, used for the sole purpose of supporting charitable organizations you care about. It allows donors to make a charitable contribution, receive an immediate tax deduction, and then those funds can be invested for tax-free growth. You can also recommend grants to virtually any IRS-qualified public charity.

When you give, you want your charitable donations to be as effective as possible. Donor-advised funds are currently the fastest-growing charitable giving vehicle in the United States, they are one of the easiest and most tax-advantageous ways to give to charities you care about.

You are able to donate cash, stocks, cryptocurrency, or non-publicly traded assets such as private business interests, and private company stock to be eligible for an immediate tax deduction. It is important to remember the funds cannot be returned to the donor or any other individual or used for any purpose other than grantmaking to charities; a contribution to a DAF is an irreversible gift to charity.

While you’re deciding which charities to support, your donation can potentially grow, making even more money available for charities. Most sponsoring organizations have a variety of investment options from which you can recommend an investment strategy for your charitable dollars.

Who can open a donor-advised fund account?

Individuals, families, companies, foundations, and other entities are all able to start a donor-advised fund account.

How much do I need in order to open a donor-advised fund account?

To start a donor-advised fund account with Giving Center, you will need to make a contribution of at least $10,000. Once your account is established, you may make continuous contributions. If you make a contribution with a credit card, the contribution minimum is only $1,000.

May I choose the name of my donor-advised fund account?

Yes. You are able to choose any name you wish for your donor-advised fund account. Donors usually will choose a name that reflects the main purpose of the account. Donors may also select a name that helps them to remain anonymous, such as the “Emerging Scholars Fund.”

Can my children or other family members be involved with my donor-advised fund account?

Yes. You may appoint advisors or successor advisors to your account. They can legally take on these roles if they are at least 18 years of age.

Can my donor-advised fund exist in perpetuity?

The named successor advisors will have advisory privileges on accounts that are created out of your account assets. That successor advisors may then choose to name their own successor advisors who will succeed on accounts created out of those assets, and so on.

What will happen to my donor-advised fund account if there are no named successors?

You may designate one or more charitable organizations as an account beneficiary. If you do not indicate a charitable beneficiary or successor advisors to your DAF account, Giving Center may annually distribute 5% of the balance to the charitable organizations that have previously received grants.

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