Donor-advised funds (DAF) - Financial definition
Concise definition of the term donor-advised funds
Donor-advised funds (DAFs) are charitable investment accounts where donors can make a charitable contribution, receive an immediate tax benefit, and recommend grants from the fund over time. These funds are managed by public charities, which handle the investment and disbursement of assets.
Comprehensive definition of the term donor-advised funds
Donor-advised funds (DAFs) provide a flexible and efficient vehicle for charitable giving, allowing donors to make contributions of cash, securities, or other assets to the fund. Once the donation is made, the donor receives an immediate tax deduction, though the disbursement to specific charities can be spread out over multiple years according to the donor's recommendations.
DAFs are typically managed by community foundations, financial services firms, or specialized nonprofit organizations, which invest the assets and handle administrative tasks. This structure is particularly appealing for individuals seeking to simplify their philanthropic activities, benefit from potential growth of the invested funds, and involve family members in charitable decision-making.