Donor-advised funds are gaining a lot of popularity because of all the benefits that they provide. A lot of people thought that these benefits were only available to ultra-wealthy people or people who could create family foundations. But with a donor-advised fund, you can get a lot of those same benefits. 

As the donor to a DAF (donor-advised fund),

  1. You can give any amount you decide
  2. There are multiple ways to give, including cash, stock, funds, or real estate
  3. You get a tax deduction, same as if you were to give directly to the institution

So, why not just give directly to the institutions, the charities?

Here are a couple of reasons: 

  • Let’s say that you were going to give a stock – a highly-appreciated asset – and that you had multiple charities that you wanted to give to. You could fill out the DTC forms and everything needed to give to those different charities directly from your brokerage account. Or you can just do it one time and get it into your DAF, and then once the money is in there, you can decide the time and the place and when you want to give.
  • If it’s a big income year and, for tax purposes, you’d like to give more than you usually do. Well, rather than flooding the charity with a bigger gift than normal – for example if you normally give 10, and this year you’re going to give 50 – you could put in 50K out of any of your assets. And then over the next five years, you can have it spread out and sent out to each charity at the timing and pace you want. So you have a little bit more control over how it gets to get to these charities. 
  • You can also “give” real estate. Let’s say that you have a building and it has appreciated in value. You can give a portion of your building to a DAF and it gets converted into monies that you can then give out, which is pretty crazy to think about and really cool that it’s actually possible. 
  • One of the other advantages, and the reason why I use it personally is, yes, to give stock. But then the other reason is just setting it up on autopilot where every month or year, I can set up an amount that goes to each charity, and then I can let it go. And at the end of the year, I don’t get three receipts or however many charities you give to. You just get one from your donor-advised fund. 

So that’s a simple example of what a donor-advised fund is, as well as some of the benefits. 

Other institutions that have options for donor-advised funds:

  • Vanguard
  • Fidelity
  • Schwab
  • American Endowment Foundation
  • National Christian Foundation
  • Charityvest, a no-fee donor-advised fund

If you’ve got questions about donor-advised funds, you can either give us a call or click here to schedule a time to talk.