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Donor-Advised Fund

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Definition:

Donor-advised funds (or DAFs) are charitable giving accounts offered by a sponsoring organization that are designed as an accessible, simple, and less expensive alternative to private foundations.

Donors contribute tax-deductible assets to their accounts, advise the sponsoring charity on how it should invest the assets so that they grow before they are granted, and recommend grants from their accounts to charitable organizations of their choice over time.

When you deposit money into a donor-advised fund, it is an irrevocable donation to the organization that holds the account.

The sponsoring organization does the record keeping and due diligence, and, unlike private foundations, can protect a donor's identity if that is requested.

The money in the donor-advised fund is disbursed according to your directions, but most entities that provide DAFs do counsel donors on donor strategies and will even scout out opportunities for your donations.

Donor-Advised funds are often provided by community foundations and by for-profit financial services companies such as the Fidelity Charitable Gift Fund, the Vanguard Charitable Endowment Program, and the Schwab Fund for Charitable Giving.

Also Known As: Charitable Gift Account, DAF
Examples:
Donor-advised funds make it possible for donors, who can afford $5,000 or more in charitable giving, to provide grants more easily than by setting up their own private foundation.
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