What is a Donor Advised Fund?

What is a Donor-Advised Fund?

A donor-advised fund is an account established for charitable giving through a sponsoring organization, such as a public charity, religious organization, or community foundation that qualifies as a section 501(c)(3) nonprofit.

How does a donor-advised fund work?

When you contribute to a donor-advised fund, the assets are managed by the sponsoring organization. You can contribute cash, appreciated stock, or other assets and potentially receive a tax deduction. Over time, you can also recommend grants to qualified charities from the fund.

What are some benefits of choosing a donor-advised fund?

• Donor-advised funds appeal to individuals for their simplicity and organization. All charitable contributions and grants are recorded in one place.
• Many DAFs accept both cash and non-cash gifts, such as appreciated securities.
• Donors can choose whether to make their gifts publicly or privately, if they prefer anonymity.

What are some considerations I should think about before opening a DAF?

While donor-advised funds can help simplify charitable giving, they might not be the best option for everyone. Each sponsoring organization has its own structure, so it’s important to understand the details before opening an account. It’s also worth remembering that once assets are contributed to a DAF, they generally become irrevocable charitable gifts.

How StackStone Wealth Supports Charitable Planning

At StackStone Wealth, we believe financial planning can reflect the causes and communities that matter most to you. Whether you're already giving or just getting started, a donor-advised fund can offer a flexible way to help support the causes your care about. Let’s connect to see if it’s the right fit for your goals.

To learn more about DAFs, click here.