Donor Advised Fund Basics
A Donor Advised Fund is a fund or account at a qualified public charity—referred to in the law as the “sponsoring organization” of the DAF—over which a donor or a donor-appointed advisor retains advisory privileges regarding the investment and/or distribution of assets in the account; thus the name “donor advised fund.”
The first donor advised fund was created in 1931, and over the past 90 years nearly 3000 sponsoring organizations have created over 750,000 individual giving funds/donor advised funds.
DAF vs Charity
A DAF allows there to be a qualified non-profit as the stewarded middle to minimize liability to any corporation.
Allows Donor Advisor (Contributor) to recommend for use tax advantaged capital and under the CARES Act for corporations, up to 25% of Adjusted Gross Income (AGI) could be written off for 5 years.
DAF Flexible Advantages
Mission-related investments from a DAF can produce a surplus that can be returned back to the DAF or any other DAF account of choosing, allowing for growth to be further stewarded, deployed, and grown for impact.
A DAF can invest up to 25% equity into a for profit entity. A DAF can also, be gifted ANY amount of equity in a for-profit entity.
A DAF qualifies to be the “qualified recipient” of any form of required minimum distribution - from RMD of Private Foundations, IRAs, and more.