A donor-advised fund (DAF) is a centralized charitable account. It allows charitably inclined individuals, families, and businesses to make tax-deductible charitable donations of cash, publicly-traded stock, and, in some cases, certain illiquid assets, to a public charity that sponsors a DAF program.
A sponsoring organization is a 501(c)(3) public charity that sponsors a DAF program.
A DAF is a centralized vehicle for charitable giving that makes it easy for donors to dedicate funds to support their favorite nonprofit organization. It also provides an operationally convenient and tax-efficient method for donors to manage their charitable giving.
With a DAF, charitably inclined individuals, families, and businesses make an irrevocable gift to a public charity that sponsors a donor-advised fund program, and may take an immediate tax deduction. Donors can then recommend grants over time to IRS-qualified 501(c)(3) public charities. DAFs also allow donors to approach their charitable giving thoughtfully by involving other family members or colleagues in their philanthropic decisions. Most DAFs accept donations of long-term appreciated securities and other assets, and donors can advise how the funds are invested, which could potentially allow tax-free growth, and could result in more money for your charity.
Donor support is the lifeblood of all nonprofits. The easier you make it for donors to support your organization, the more likely it is that you will reach your fundraising goals.
In recent years, DAFs have become an increasingly popular way to manage charitable giving. In fact, the number of individual DAFs grew 29% from 2010.1 Because DAFs are irrevocable, the volume of grants coming from DAFs is relatively independent from market fluctuation and recession. The average grant from DAFs has remained relatively stable for the past decade, despite economic variables, while the number of grants per DAF has increased.2
The average grant coming from the nation’s two largest DAF sponsors was more than $4,000 in 2015.2 During this same year, the average online contribution made by individuals via some other means (including PayPal™ and credit card) was $146.3
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1 Qualified nonprofits are IRS-qualified public charities in good standing that are described in Section 501(c)(3) and 509(a)(1), (a)(2), or (a)(3) of the Internal
Revenue Code and private operating foundations as described in Section 4942(j)(3). Non-functionally Integrated Type III Supporting Organizations and
Private Non-Operating Foundations are not eligible.
2 "Fidelity Charitable 2015 Giving Report."
3 "npEngage, 5 Facts About Online Average Gift Size, 2012." http://www.npengage.com/nonprofit-research/5-facts-about-online-average-gift-size/