Key Term

What is Donor Adivsed Fund (Daf)?

Definition

A Donor Advised Fund (DAF) is a charitable giving vehicle administered by a public charity that allows donors to make irrevocable contributions to the fund, receive an immediate tax deduction, and then recommend grants from the fund to qualified nonprofit organizations over time. The assets in the fund can be invested and grow tax-free until the donor decides to recommend grants to charities.

Significance

DAFs have become increasingly popular in charitable giving because they offer significant advantages for donors and nonprofits alike. They provide donors with immediate tax benefits while allowing for strategic, long-term charitable planning. DAFs are particularly valuable during high-income years when donors can maximize tax deductions, and they simplify the giving process by consolidating charitable contributions into a single account. They also offer the ability to give anonymously and can serve as a powerful tool for creating a family legacy of philanthropy, as donors can name successor advisors to continue making grant recommendations after their lifetime.