Donor Advised Funds

donors contribute, assets grow, charities benefit. Icons courtesy of National Philanthropic Trust.

Donor advised funds (DAFs) are quickly growing in popularity in the world of philanthropy. Gifts from a donor advised fund are easy to make and the DAF provides tax incentives for many donors.

A donor advised fund could be described as a charitable investment account. The sole purpose of the DAF is to support charitable organizations you care about while giving you tax incentives. A donor advised fund allows you to make a charitable contribution, receive an immediate tax benefit, and then you can recommend distributions from the fund over time.

Simply put, you contribute to your donor advised fund as often as you like. When you are ready to make a gift from your DAF, you speak with the fund holder (many times a community foundation), and request donation amounts be made to your favorite charities.

For example: Joyce Jones sets up a DAF with her local community foundation. The foundation invests the money along with their other assets, and it grows faster than if Joyce invested it herself or put it in a savings account. Some time later, Joyce decides she wants to donate to the Wisconsin Council of the Blind & Visually Impaired. She notifies the foundation and a check is sent to the Council.

Changes in tax laws are forcing donors to rethink their charitable giving. For some, giving a one-time larger amount to establish a donor advised fund may be a wise tax decision, simplifies recordkeeping, and is flexible to suit your charitable needs.

If you have a donor advised fund, please consider recommending a gift to the Council. Contact your financial advisor if you would like more information on setting up a DAF.

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