Charitable giving and tax planning do not always have to happen on the same timeline.
A Donor-Advised Fund, or DAF, is a charitable account maintained by a sponsoring public charity.
Here is the basic structure:
1️⃣ A donor makes an irrevocable contribution to the account.
2️⃣ The sponsoring organization manages and invests the assets.
3️⃣ The donor recommends grants to eligible charities over time.
Why might someone consider this strategy?
• Consolidate charitable giving in one account
• Contribute during a year when income is unusually high
• Potentially donate eligible appreciated assets instead of selling them first
• Allow charitable assets to remain invested before grants are recommended
• Create a more organized approach to family philanthropy
The strategy separates the timing of the charitable contribution from the timing of grants to individual charities. That flexibility can be useful when someone wants to plan proactively but has not yet decided which organizations to support.
DAFs have also become a significant part of charitable giving. In fiscal year 2024, 1,512 sponsors managed 3.59 million DAF accounts, with $90.57 billion in contributions and $64.60 billion in grants.
A DAF is not appropriate for every donor. Contributions are irrevocable, tax treatment depends on individual circumstances, and the sponsoring organization maintains legal control of the assets. Any strategy should be reviewed with financial, tax, and legal professionals.
The goal is not simply to receive a deduction. It is to make charitable giving more intentional, organized, and aligned with a broader financial plan.
Donor Advised Fund Primer - DAF Research Collaborative
Content in this material is for general information only and not intended to provide specific financial or tax advice or recommendations for any individual.