Donor-advised funds are the fastest-growing charitable giving vehicle because they are the easiest, and most tax-savvy way to give to charities like Child Hope International.
What is a Donor-Advised Fund?
A Donor-Advised Fund, or DAF, is a simple, tax-smart investment solution for charitable giving.
It is like a charitable investment account that is set up for the sole purpose of supporting charities. Donors can contribute cash, stocks, or other assets into the DAF and receive an immediate tax deduction. Those funds are invested for tax-free growth and the donor can recommend donations to charities of their choice over time.
How does it work?
Donors Contribute
Open an account and make a deposit to receive an immediate tax deduction.
Assets Grow
The charitable assets in the DAF are invested and grow tax-free.
Charities Benefit
Recommend donations to your favorite charities at any time.
What are the benefits of giving through a Donor-Advised Fund?
- Support a charity you believe in through strategic giving, over time.
- Take advantage of immediate tax benefits with the ability to distribute funds later.
- Ensure that you meet and/or exceed standard deductions by combining donations of stock to a DAF.
- Consolidate all your charitable giving.
- Maintain family involvement in charitable decisions.
- Create a lasting legacy.
What are the tax benefits?
Unlike private foundations, donor-advised fundholders enjoy a federal income tax deduction of up to 60% of adjusted gross income (AGI) for cash contributions and up to 30% of AGI for the appreciated securities they donate. When donors transfer assets such as limited-partnership interests to donor-advised funds, they can avoid capital gains taxes and receive immediate fair market value tax deductions.
How can I get started?
Most popular DAF institutions have an easy online application process that will get you started.
Here are a few examples:
- American Endowment Foundation
- Fidelity Charitable
- National Christian Foundation
- National Philanthropic Trust
- Schwab Charitable
- Vanguard Charitable
Want to learn more?
Visit Investopedia’s page on Donor-Advised Funds, linked HERE.
**Disclaimer**
The material on this website has been prepared to provide general information regarding Donor-Advised Funds. It is not intended to serve as legal, tax, or other financial advice.
You should consult with your own attorney, CPA, or other advisor regarding your specific circumstance.