What is a Donor Advised Fund?
A Donor Advised Fund (DAF) is like a charitable investment account, for the sole purpose of supporting charitable organizations you care about. When you contribute cash, securities or other assets to a donor advised fund, you are eligible to take an immediate tax deduction. Those funds then can be invested for tax-free growth and you can recommend gifts and grants to IRS-qualified public charities such as The River School.
When you give, you want your charitable donations to be as effective as possible. DAFs are the fastest-growing charitable giving vehicle in the United States because they are one of the easiest and most tax-advantageous ways to give to charity.
1. Make a tax-deductible donation
Donate cash, stocks or non-publicly traded assets such as real estate, private business interests and private company stock and get your tax receipt. You’ll also be eligible for an immediate tax deduction.
2. Grow your DAF, tax-free
Your donation can potentially grow based on your investment preferences, making available even more money for charities.
3. Support charities you love, now or over time
You can support charities with money in the donor-advised fund. The public charity sponsoring your DAF will conduct due diligence to ensure the funds granted out will be used for charitable purposes and the grantee is an IRS-qualified public charity.
Organizations such as Fidelity Charitable, Charles Schwab and community foundations can sponsor a Donor Advised Fund. A DAF is not a separate charity; instead, it is a discrete fund or account within a public charity (the sponsor such as Fidelity). The threshold for opening an DAF account is commonly $5,000, much lower than a private foundation and without the legal and management costs.
4. Be sure to name beneficiaries
Name successors and/or charitable organizations as beneficiaries. If you don't take this step, the balance of the fund will revert to the DAF sponsor.
Questions about giving with or setting up a DAF? Contact Jen Lynch, Director of Advancement.