DAF Funds
A donor-advised fund (DAF) offers immediate tax benefits, simplicity, and strategic flexibility without the administrative burden of a private foundation.
The Fund for Academic Renewal (FAR) helps donors determine whether a DAF is the right vehicle for their college gifts or if there are better alternatives for their philanthropic goals.
What Is a Donor-Advised Fund?
A DAF is a charitable account that allows you to contribute assets, receive an immediate tax deduction, and recommend grants to IRS-qualified nonprofits at your pace.
DAFs are administered by major financial institutions such as Fidelity, Charles Schwab, and National Philanthropic Trust or through mission-driven organizations like DonorsTrust and the Bradley Impact Fund. Many community foundations also offer DAFs. Once your fund is established, you can give on your own timeline and with far more flexibility than a permanent endowment or private foundation provides.
Why Donors Use DAFs
DAFs offer both convenience and control. You can claim tax deductions in the year you contribute, even if you decide later where to direct your support. A single account simplifies your giving, and many providers offer investment options so your gift can grow tax-free while you plan. Unlike private foundations, DAFs do not require a board, filings, or overhead, though the DAF provider may charge administrative fees.
Using a DAF to Support Higher Education
A DAF is one of many giving vehicles available to college donors. For donors with less than $100 million in assets, DAFs offer similar advantages to a private foundation but with fewer regulations and far less paperwork.
FAR helps donors use DAFs to:
- Make a major gift over time while receiving immediate tax benefits.
- Give anonymously if they so choose.
- Avoid the administrative hassle of starting a private foundation.
How DAFs Work
While specifics vary by provider, the process is straightforward:
You contribute assets such as cash, securities, or more complex holdings like real estate or vehicles and receive an immediate tax deduction. Your DAF provider may offer investment options based on when you plan to recommend grants. Investment growth is tax-free, adding value to your account. Some DAF providers may require funds to be dispersed within a certain time period, often seven years.
When you are ready, you recommend a grant to a qualified charity. You may choose to remain anonymous or share your information with the recipient.
Because DAFs offer tax deductions upfront, donors legally relinquish ownership of their contributions. This means the sponsoring organization can, in rare cases, deny a grant recommendation that conflicts with its policies. Before opening a DAF, ask your provider about its grant guidelines and approval process.
Get Started
Open a DAF Account
Choose a sponsoring organization and contribute cash, appreciated stock, or other assets. FAR can help you determine which type of sponsoring organization best fits your needs.
Partner with FAR
FAR can help you build a strategic giving plan, vet institutions, and structure your gifts to safeguard your intent.
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Direct your support to the programs and priorities that matter most to you and on your terms.