DONOR-ADVISED FUND
Back to GlossaryDefinition
A separately identified fund or account that is maintained and operated by a non-profit organization. Once the donor makes the contribution, the organization has legal control over it.
Summary
A Donor-Advised Fund (DAF) is a charitable giving vehicle that allows individuals to make a tax-deductible donation to a sponsoring organization, then recommend how those funds should be distributed to qualified charities over time. Think of it as a 'charitable savings account' where you get an immediate tax deduction when you contribute, but can take time to decide which specific charities to support. The sponsoring organization legally owns the funds but typically follows the donor's recommendations for distributions.
Usage Context
Understanding DAFs is important when studying philanthropic strategies, tax-efficient giving methods, nonprofit fundraising sources, and wealth management planning for high-net-worth individuals.
Common Confusions
- Thinking the donor maintains legal control over the funds (the sponsoring organization has legal control)
- Confusing DAFs with private foundations (DAFs have lower minimums and less administrative burden)
- Believing funds must be distributed immediately (they can remain in the fund and grow over time)
- Assuming all recommendations must be followed (sponsoring organizations have discretion, though they typically comply)
