from Wells Fargo Conversations

Learn about the basics and potential considerations of adding a DAF to your giving plan.

Are you looking for ways to streamline your approach to pursuing your philanthropic goals? Donor-advised funds, also known as DAFs, can offer a middle ground between participating in simple “checkbook charity” and starting your own foundation.

Donor-advised funds are often considered smaller and nimbler cousins of private foundations. They offer many of the benefits of foundations, including the ability to:

  • Involve multiple members of the family, friends, or other advisors
  • Research potential grant recipients
  • Recommend how funds are distributed

Since DAFs are public charities, they typically offer greater tax deductibility options and require less legal and financial paperwork than private foundations. For example, they help reduce administrative responsibilities for the donor, including filing annual tax returns, adhering to regulatory requirements, and paying excise taxes.

Donor-advised funds allow you to contribute cash, stock, real estate, or other assets such as business interests. These contributions can be bunched to combine multiple calendar years’ worth of gifts into one year, which may offer tax benefits if you are close to your standard deduction limit.

To set up a donor-advised fund, you only need to complete an application with a fund sponsor. A fund sponsor can be a national or community foundation, an educational institution, or a religious institution. You or your designee may then recommend grants to qualified charities of your choice.

Rather than keeping track of gift receipts from multiple charities, a donor-advised fund can serve as your single source for tax receipts and grant recipient information.

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Contact us about making a DAF contribution to JCA.