Donor Advised Funds Overview
A Donor Advised Fund (DAF) functions as a conduit. You make your contribution and claim your tax deduction now, then distribute money out to specific nonprofits over years or decades while your charitable dollars are invested and growing tax free. These funds, established through the Community Foundation, allow donors and their families to participate in the research, selection and awarding of grant dollars. Donors are free to give to any charitable cause, local or not, through a DAF.
A DAF can effectively function as a family foundation while offering much of the flexibility and appeal of a private foundation - without many of the regulations, requirements and overhead expenses. DAFs are among the fastest growing charitable vehicles in personal philanthropy.
Is a Donor Advised Fund the right vehicle? Is a private foundation the right vehicle? There is no simple answer. Each tool offers its own advantages and disadvantages.
View this chart to learn more about the differences between a DAF and a private foundation.
Donor Advised Funds operate under these general guidelines and policies:
- A minimum fund balance of $25,000 is required before grants can be made from the fund. Donors have the option to grow their balance to the required minimum level over a short period of years, if necessary.
- The donors and/or an advisory committee of the donor and their family may be established at the time of the gift to make recommendations on grants from the fund.
- Legally, all recommendations made by the donor or their advisory committee are recommendations only, with the final approval made by the Trustees of the Foundation.
- As with all endowment funds at the Community Foundation, assets in a DAF are owned and controlled by the Community Foundation.
- Foundation staff and/or volunteers will conduct research on all recommendations to ensure that they are consistent with the mission of the Community Foundation.
- Donor Advised Funds can be created at no cost, through outright gifts of cash, publicly or privately held stock, real estate, Charitable Remainder Trusts or Charitable Gift Annuities.
Tools & Links
PDF file - you will need the free Adobe Reader (or equivalent) to view. Download here.