Donor Advised Fund (DAF)

Donor advised funds (DAFs) are a good tool to use if you wish to give a significant amount of support to charitable causes and do not wish to have a Private Foundation.  There are many donor advised funds available and if you have a Private Foundation it is possible to convert it to a donor advised fund to simplify administration.  When you give to a Donor Advised Fund you receive an immediate deduction.  However, you may decide at a later date which charities you would like to benefit.  You may also donate appreciated items such as securities and avoid the capital gains taxes while fulfilling your charitable desires.

How Do I Make a Gift Using a Donor Advised Fund?
Since each donor advised fund is run privately, you should contact the particular donor advised fund you  wish to use to find out how they would like you to proceed in making a grant to them.  You may make "recommendations" as to which charities you would like your assets to benefit.

 
There are many advantages of a donor advised fund:

According to National Philanthropic Trust, the Donor advised fund is the fastest growing  charitable giving vehicle.  It is second only to Charitable Remainder Trusts.

Enjoy an immediate tax deduction

Your contributions are fully tax deductible in the year they're made.

Donate appreciated securities tax free

When you donate appreciated securities to a Donor Advised Fund, you may immediately deduct their fair market value from your taxes, without incurring any capital gains liability.

Create a legacy of giving

You may name account advisors who will have the ability to recommend grants from your account. You also have the ability to select successors, who can continue your charitable legacy by recommending grants beyond your lifetime.

Separate tax planning and charitable decisions

Immediate tax advantages through contributions can be achieved now and grants can be recommended to charities later. Donor Advised funds can help eliminate the year end pressure to select a charity and make a grant.

Record keeping made easy

Donor Advised funds provide consolidated reporting and record keeping. You'll receive quarterly account statements, gift receipts and IRS ready tax information. There is no need to hire your own attorney to draft trust documents and no need to hire a CPA to draft an individual return for your account.

Confidentiality

If you prefer, your grant(s) can be made anonymously, so that your name and personal information will not be known.

There are also some disadvantages of a donor advised fund:

Limited Control
you do not enjoy the same control as you would with a private foundation.

Reduced Charitable Emphasis
some for-profit institutions that offer donor advised funds may care more about management of the assets than the gifts created.

Assets Used With This Tool (Donor Advised Fund[DAF])

• Art
• Cash
• Collectibles or other tangible personal property
• Commercial real estate
• Equipment or inventory
• Farm or ranch
• Life insurance policy with cash value
• Patents, royalties or copyrights
• Personal residence
• Retirement plan assets
• Securities
• Unimproved property