Donor Advised Funds

Practical and Convenient Giving

Would you like to be more strategic about when you make donations to CFT? Are you trying to donate enough to get a tax break, but not quite feeling ready?  A donor advised fund (DAF) may be the answer.  While the name sounds complicated, don’t let it fool you.  A DAF is actually a simple way to be more strategic when it comes to charitable giving. 

In essence, a DAF is a specialized brokerage account.  A DAF is typically set up with major brokerages, and sometimes at a community foundation.  Once the account is established, the funds in it are invested in securities – just like in a 529 Plan or 401(k).  And like gifts to charities, contributions to a DAF are tax deductible at the time they are made.  But unlike a 401(k) or 529 Plan, funds deposited into a DAF are no longer your property; rather they “belong” to the brokerage and are distributed based upon your advice (hence the name donor “advised” fund). 

Once you have opened and made a deposit to your DAF, you can take your time in making your charitable gifts.  The funds in your DAF can only be used for charitable gifts, but they can be gifted on your schedule.  That means you can participate in a giving day to take advantage of matching gifts, make a gift to help a particular campaign that speaks to you, or make a year-end gift to your favorite charities.  Whatever you like – your gift, on your schedule. 

When Jon and Kitty Harvey were considering their options for strategic giving, they ultimately decided a DAF was the way to go.  Jon says, “In our case, a DAF was far more practical than a Private Foundation for stewarding our charitable giving.  The DAF allows us a convenient buffer to make charitable donations optimizing for tax purposes, but then direct the funds to various charities whenever we desire in the future.”