What is a donor advised fund?

A donor advised fund (DAF) is an investment account with the sole purpose of supporting charitable organizations you care about. When you contribute cash, securities, or other assets to your DAF, you’ll enjoy an immediate tax deduction—and easily support VLS on your schedule.

 

You can make one-time gifts or set up recurring monthly donations. You can give to one charity or multiple, all from a single DAF. DAFs are the fastest-growing charitable giving vehicle in the United States because they are one of the easiest and most tax-advantageous ways to give.

 

How do donor advised funds work?

1. To establish the fund, an individual makes an irrevocable tax-deductible contribution (cash, stock, real estate, etc.) to a sponsoring organization, community foundation or financial institution. Individuals receive a tax receipt and tax benefits when funds are deposited into their DAF.

2. The DAF sponsoring organization oversees those funds as they grow tax free. 

3. The assets within the fund now legally belong to the sponsoring organization but the DAF account holder retains advisory privileges over disbursements made from the DAF in addition to the investment strategy.

4. DAF account holders can recommend single or recurring donations to charitable organizations. Funds in a DAF can only be used to support organizations that are tax-exempt 501(c)(3) and classified as public charities under 509(a).

5. Once the DAF sponsoring organization approves, the recommended donation is made to the qualified charitable organization, such as VLS.

 

What are the benefits of using a donor-advised fund (DAF)?

• Easily contribute a wide range of assets to a single, philanthropic fund.

• Centralize your giving and record-keeping in one location.

• Make an impact in the world—and enjoy an immediate tax deduction.

• Sustain the charities most important to you by establishing recurring DAF gifts.

• Your DAF sponsor can help you identify and vet qualified nonprofit organizations that align with your values.

• Respond quickly as crisis moments arise.

• Eliminate capital gains on donated stock.

• Invest your donation for tax-free growth.

• Support your legacy planning—many DAF sponsors allow you to pass the remaining funds in your account at your death to your favorite charities.

• Start a legacy of giving—involve your children and discuss why giving is important to you.

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For more information on how to establish a DAF, contact your community foundation or financial advisor.