What Is a Donor-Advised Fund?
A donor-advised fund (DAF) is a vehicle for charitable contributions that has the structure of a private foundation without the administrative burden of one. The steps for setting up a donor-advised fund are:
- Establish a DAF with a financial institution.
- Make a donation of cash, securities, real estate, or shares in a partnership to the DAF.
- Upon making the contribution you immediately receive the full tax deduction.
- Let your contributed assets grow over time as you decide which charities to support or donate the assets right away.
With a donor-advised fund, you receive the tax benefit of your philanthropy right away while you decide how to make the most of your contribution. A DAF is ongoing as well, so you can contribute and receive tax deductions each year.