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What is a donor advised fund?

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A donor-advised fund (DAF) provides donors with a centralized charitable giving vehicle. It allows philanthropically inclined individuals, families and corporations to make an irrevocable charitable gift to a public charity that sponsors a DAF program and take an immediate tax deduction. Most sponsoring organizations of DAFs accept cash equivalents, securities, and certain other assets.

How does it work?

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  • Establish your Donor Advised Fund by making an irrevocable, tax-deductible donation to a public charity that sponsors a DAF program
  • Advise the investment allocation of the donated assets (any investment growth is tax-free)
  • Recommend grants to qualified public charities of your choice

Main Advantages of a Donor Advised Fund

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  • Simplicity – The DAF sponsor handles all record-keeping, disbursements, and tax receipts.
  • Flexibility – Timing of your tax deduction can be separate from your charitable decision making.
  • Tax-efficiency– Contributions are tax-deductible and any investment growth in the DAF is tax-free. It is also easy to donate long term appreciated securities, eliminating capital gains taxes and allowing you to support multiple charities from one block of stock.
  • Family legacy – A DAF is a powerful way to build or continue a tradition of family philanthropy.
  • No start-up costs – There is no cost to establish a donor advised fund. However, there are often minimum initial charitable contributions to establish the DAF (typically $5,000 or more).**
  • No transaction fees – Once approved, 100% of your recommended grant goes to your qualified public charity of choice.**
  • Privacy if desired – Donors may choose to remain anonymous to the grant recipient.

**Sponsoring organizations generally assess an administrative fee on the assets in a DAF. These fees vary by sponsoring organization.