A donor-advised fund (DAF) is a charitable investment account through a sponsoring organization that allows donors to make an immediate tax-deductible contribution.
Once you have contributed to your account, the money is invested while you decide which IRS-qualified organization to support. When you’re ready, you may then support your favorite nonprofit or charity by recommending the organization for grants.
When you recommend Friends of the Blue Hills for a grant, you are harnessing the additional giving power that comes with the investment of your initial contribution. This means that Friends of the Blue Hills receives additional funding to protect and preserve the Blue Hills Reservation.
What are the benefits of a DAF?
Investing in a DAF enables you to:
- Maximize tax benefits
- Make an immediate contribution, allowing strategic giving
- See tax-free growth of the contribution through investment, allowing for greater impact
- Provide tax-deductible support for international organizations
- Streamline giving, allowing you to give to multiple organizations from one account
- Ease administrative burden by having your account handled through the national sponsoring organization
- Establish a charitable legacy
How do I create a DAF account? Is there a minimum contribution?
A DAF account can be created through a national sponsor organization, such as Fidelity Charitable, the National Philanthropic Trust, or the Bank of America Charitable Gift Fund. There is typically a minimum contribution amount, but it may vary by the organization.
Can I retract a contribution to my DAF account?
Contributions to a DAF are irrevocable, and cannot be used for personal financial benefit; once placed in a DAF, the funds may only go to a qualified organization.
Sources: National Philanthropic Trust, Fidelity Charitable
Photo: “View from Great Blue,” by Nathan Adler, Brighton
