What Is a Donor-Advised Fund?
A DAF is a charitable giving tool that allows individuals to make tax-deductible donations to a sponsoring organization, or public charity. This organization holds and invests the money and recommends grants from the DAF to a qualified charitable organization (like Meals on Wheels!).
How Does a Donor-Advised Fund Work?
There are four general steps to making a difference with a DAF.
- Donors give cash, stock, or other assets to the sponsoring organization and receive an immediate tax deduction.
- Funds are invested and grow tax-free.
- Donors recommend which charitable organizations should receive grants and for what purpose.
- The sponsoring organization reviews recommendations, approves grants, and distributes funds to chosen charitable organizations (like Meals on Wheels!).
What Are the Benefits of a Donor-Advised Fund?
The sponsoring organization and DAF donors are focused on making a meaningful, sustainable impact. A DAF provides more flexibility and control than traditional gifts, enabling donors to decide how grants will be distributed as DAF investments grow in value.