Donor Advised Funds (DAFs)

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What if you could handle all your charitable giving (and the resulting tax deductions) from one simple account—and easily donate just about any type of asset to it?

Donor advised funds (DAFs) deliver these benefits. Since the 1990s, donors have increasingly turned to DAFs to simplify their charitable giving and enable tax-free investment. A DAF is hosted by a public charity (called the DAF’s “sponsor”) and works as a sort of “bank account” for all the money and assets you want to gift to your favorite organizations.

Any organization qualified by the IRS as a public charity can receive payments from your DAF, giving you the freedom to steward your resources where you want. Donorperfect and National Philanthropic Trust report that the number of DAFs nationwide has more than doubled in five years, reaching a record high of 460,000 accounts.

How do DAFs work?

  1. You establish the DAF at a public charity.
  2. You contribute assets to the fund. This could be cash, stocks, real estate, cryptocurrency and more. You receive a tax receipt for your gift(s) from the DAF sponsor.
  3. You direct grants from your DAF to the charities of your choice at the timing of your choice. Your DAF sponsor completes the actual work of making the gift and assuring it is used for charitable purposes. 

What are the benefits of using a DAF for charitable giving?

  1. Receive immediate tax deductions on all assets contributed to your DAF. Even if you don’t put all of it toward charitable grants that year, you can still take deductions on the full amount you put into the fund.
  2. Grow your DAF tax-free. You can invest your funds without paying taxes on the resulting gain.
  3. Quick and easy setup. You can establish a DAF fund with minimal paperwork, and can even establish one online.
  4. Invest complex assets—simply. Some assets like property and privately-held stock are more complicated for organizations to accept and liquidate, particularly smaller charities. Your DAF sponsor handles the liquidation work, meaning any type of gift made to your DAF can benefit any organization with no hassle to the recipient.
  5. Consolidate your charitable activities into one account. Using a DAF allows you to get one tax receipt for all your charitable activity, keep all records in one account, and organize the process of divvying funds among different recipients.
  6. Authorize others to use it. Your financial advisor and family members can assist you in managing the fund. This creates the potential for your DAF to benefit the organizations you care about after your death, and opens the door for your family to carry on your legacy of generosity and the values you hold dear.

Email the Office of Advancement or call at 618-664-6500 to learn more about directing a DAF grant to Greenville University.

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Maci Sepp

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