Donor Advised Funds

A donor-advised fund (DAF) is a charitable giving vehicle administered by a public charity created to manage charitable donations on behalf of organizations, families, or individuals. A DAF enables a taxpayer to contribute personal assets, including cash, securities, and real estate, to an investment account, in which the assets grow tax-free. The taxpayer receives an immediate tax deduction in the amount of the fair market value of the assets contributed to the DAF. However, the taxpayer does not need to immediately decide which charities to support when he/she contributes the assets. Rather, the assets can potentially grow in the DAF based on the taxpayer’s investment preferences, creating even more money to give to charities in the future. Although the taxpayer surrenders ownership of the assets contributed to the DAF, he/she retains advisory privileges over how the assets are invested and the eventual distributions to charities.