Donor Advised Funds

Charitable Giving Accounts / Donor Advised Funds (DAF)

The Donor Advised Fund is a charitable account created by a donor with a tax-deductible gift. Once created, a DAF is used by the donor for current and future grant-making to other public charities.

DAFs are often funded with large, one-time events such as the liquidation of a business or a large asset but can be created and funded with smaller gifts over time.

Grants from a DAF are made to other public charities selected by the donor at intervals determined by the donor. This “advisory” role can be handed down to others, including successive generations, which can perpetuate a family legacy of giving.

A Donor Advised Fund is often compared to its more complex cousin known as a Private Foundation. By contrast, a donor advised fund is less expensive to set up and manage, is subject to less restrictive IRS regulations, and provides donors more generous tax incentives¹. For this reason, DAFs have been one of the fastest growing types of public charities in America for the last several decades.

A Donor Advised Fund is a public charity maintained by a sponsoring organization licensed to serve in that capacity. Many of America’s largest public charities are DAF sponsors, and most allow a donor’s personal financial advisor to manage the investments within the account which grows tax-free.

Most DAF sponsors do not accept gifts of real estate and refer donors who have such gifts to a specialized nonprofit like Realty Gift Fund who accepts the gifts, repairs and sells them, and grants the net proceeds of sale to the donors DAF account. RGF accepts gifts of appreciated property, provides the tax benefits directly to the donor, and relieves the donor and DAF sponsor of the risk, liability and responsibility of accepting title to a complex gift of real estate.

65% of the funds that RGF produces are granted to Donor Advised Funds. To learn more about gifts of real estate that fund Donor Advised Funds please contact one of us.

¹DISCLAIMER Tax discussions provided herein are general in nature, not offered as actual tax advice, and not intended to propose any possible tax outcomes. Interested parties must obtain advice from their own qualified independent tax professionals.