What is a Donor Advised Fund?
Donor advised funds, commonly referred to as DAFs, are simply parking spots for future charitable gifts. All organizations that offer DAFs have registered as 501(c)3’s. Donor make irrevocable charitable contributions to these accounts that can be funded with cash, appreciated securities, and many other assets. Donors receive immediate tax benefits, and then make grant recommendations over time.
The Benefits
DAFs allow you to easily convert assets that are more easily accepted by the charities you love, like the Hepatitis B Foundation. For instance, most DAFs will accept more exotic assets like bitcoin, real estate, and privately held securities. These are difficult for many nonprofits to process and take away from their strengths, which is to deliver effective programs.
The Disadvantages
Most DAFs do not require an annual payout, starving nonprofits of funds that have been donated but not distributed, which is why we endorse the #HalfMyDAF initiative mentioned below. Also, while DAF contributions are directed by the donor, the financial institution managing the fund ultimately owns the funds and the family gives up legal ownership of their assets. Some may also charge fees for the accounts.
What’s right for you?
DAFs can be excellent tools for your financial situation. We recommend that you do two things:
- Talk with your spouse and family about your philanthropic goals, and
- Consult both with your financial advisor and development officers at your favorite charities to choose the best tools to make those goals a reality. Sometimes giving appreciated stock directly to your favorite charity is a better option! READ MORE HERE.
What is “#HalfMyDAF” all about? How do I get my DAF dollars to work even harder?
Currently, over $140 billion dollars sits in DAF accounts undistributed. Philanthropists Jennifer and David Risher created the #HalfMyDAF Challenge in 2020, with a goal of motivating donors to increase their distributions from their Donor Advised Funds. This year, they will award over $3 million in matching grants to nonprofits whose donors participate as #HalfMyDAF Heroes. Get more information by clicking on www.halfmydaf.com.
Will my employer still match contributions made from DAFs?
In most cases, YES! As always, check with your employer, but most companies will match DAF contributions. You can see if your company is listed for matching gifts by CLICKING HERE.
Donor Advised Funds have become a very popular giving tool. Do you need more information? Call 610-549-6453 or email joe.erckert@hepb.org for more information today.