Donor Advised Funds

November 20, 2018

As we enter November and the season of giving thanks, I am focusing the blog on giving you a vehicle to do charitable giving, perhaps in a new way. The Donor Advised Fund (DAF) has increased charitable giving over recent years.

DAFs are not new; apparently, they have been around since the 1930s, and grew more popular in the 1990s. DAFs allow you to make charitable contributions to a fund you set up at a public charity, then recommend grants from that fund over time. It’s kind of like having your own private charity, without all the paperwork and hassle. There are rules, obvi.

Donor Advised Funds


  • You can contribute cash, stocks, mutual funds, or sometimes non-publicly traded assets like real estate and shares of private company stock (depending on the DAF company you use).
  • There is usually a minimum you must
    • You get a tax deduction immediately when you make the donation to the DAF (limited to what the IRS allows).
  • The donation you make is irrevocable. You can’t give stuff to your DAF and then change your mind.


  • You can name it pretty much whatever you want, like the Jill is Super Awesome
  • Whatever you contribute to the DAF can be invested, and if it grows, it grows tax-free.
  • The DAF keeps track of the grants for you, so your recordkeeping is
  • A financial advisor can help you make the most of your
  • The money doesn’t have to go to charity You can leave this to your heirs, so it could be a way to set up a legacy or teach your kids about gifting.


  • Once the DAF is funded, you can recommend that it make grants to your favorite IRS-qualified charities. For example, you cannot choose to give money to an individual in need, but you could make a grant to a public charity, or other non-profit that is 501(c)(3) certified. Check Guidestar to see if your favorite charity qualifies.
  • Some DAFs have a minimum grant amount, but it is typically a low amount, like $50.
  • If you prefer to make an anonymous donation, you can do so with a DAF.

Bottom line is, the advantages include:

  • Tax benefits
  • Simplified recordkeeping
  • Flexibility in payouts
  • Leaving a legacy

And the disadvantages include:

  • Requires a larger initial contribution than just donating to charity
  • There are fees and expenses involved, which means less money is going to charity.
  • You may not like the investment options. Sometimes you can only choose from the company’s own mutual funds as an option.

DAFs are not for everyone, but they can be a useful way to facilitate charitable giving. Ask your financial advisor about it today!


Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes.

Any opinions are those of Jill Carr and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

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