Benefits of Donor Advised Funds
Donor Advised Fund (DAF) as a medium for raising funds by charities has seen a recent surge in popularity. The reason for this surge can be attributed to the benefits that stand to be gained by both donors and charities alike.
Benefits that stand to be gained by donors through DAFs comprise:
a). Immediate Tax Deductions
Some of the tax advantages that stand to be gained by donors include income tax benefits, Capital Gains Tax benefits, Estate Tax benefits, Tax-Free Growth benefits and Alternative Minimum Tax benefits. These tax benefits serve as an incentive to donors and encourages them to save into an account that is operated by a DAF sponsor.
b). Reliable and Cost Effective Medium for Donating to Charities
DAF provide donors with a means of saving funds over a period of time for the sole purpose of funding charities. Also, donors find it attractive because securities, cash, and appreciated assets are acceptable forms of contribution. Securities and tangible assets are acceptable since DAF's have the ability to convert these sources (securities and tangible assets) of contribution into cash.
c). Convenient Funding Timeline
A desirable feature of a DAF is that it enables donors to save funds for future giving at a convenience pace. As a result, donors enjoy the liberty that comes with giving at one's discretion.
The main benefit that charities/non-profits gain from a DAF include :
a) Consistent Source of Funding
A DAF serves as a reliable and consistent source of funding to charities since contributions tend to be larger. For instance, grants awarded to charities through DAFs are usually larger than credit card contributions.
Ultimately, viewing Donor Advised Funds as reliable vehicles for philanthropy and the accomplishment of non-profit goals will yield mutually satisfactory outcomes for participating parties.
Written By Sherita N Brace
Sherita N Brace is an International Development Professional and a Blogger. She serves as a Consultant to non-profits and provides grant writing services, program planning services and communications services.
1. 5 Primary Tax Benefits to Donors. Retrieved September 7, 2017 from
2. Donor-Advised Funds : The Benefits and Drawbacks / Investopedia. Retrieved September 7, 2017