What is a donor-advised fund? And why do you need one?
Good question. Another one you should ask is, what has become the most active charitable giving vehicle in philanthropy today?
The answer: The donor-advised fund or DAF.
Donor-advised funds, or DAFs, have been around for almost a century, but most everyday givers are unaware of their existence. In this blog, we will break down the definition of a donor-advised fund and why you’ll benefit from setting up one for your philanthropic endeavors.
What is a donor-advised fund?
A DAF is a tax-advantaged giving account. They can be funded with cash, stocks, cryptocurrencies, mutual funds, or publicly traded securities, and you receive a tax deduction.
In 1931, the first DAF was established in Manhattan by New York Community Trust, a community foundation. John D. Rockefeller Jr. maintained the foundation to allow individuals to choose which charities to support with their donations.
In 2020, grants made to charities through donor-advised funds amounted to $34.67 billion. This is an increase of 27% as compared to 2019.
Once thought of as a vehicle only for the wealthy or those in the financial service industry, DAFs can be accessed by any philanthropist, regardless of the amount donated, even in the form of micro-philanthropy.
How to set up a donor-advised fund:
What are the benefits of a donor-advised fund?
Outside of the benefit of a tax deduction, there are additional advantages to creating a donor-advised fund to assist you in your philanthropic goals.
Create a legacy of Giving
A donor-advised fund can help a philanthropist set up a legacy of giving that can extend beyond them. Donors can set up a recurring gift in their name to the charity of their choice should they pass away. They can also set up an heir for the account, and that person can use the DAF to give to charities they want to support.
Some givers like to give secretly. In contrast, others want to share but do not want to be solicited for future donations. By creating a DAF, a giver can shield their identity and make grants anonymously so that their contributions will not become public knowledge.
Now that you have the 411 on donor-advised funds, it is time to take your philanthropy to the next level by creating a donor-advised fund of your own. Through Philanthropi, you can set up a donor-advised fund. Our Impact Accounts are DAFs that are easy to set up and maintain. And along with the monetary funds you disperse to charities, our Impact Accounts also serve as private donation trackers, helping you to track your other methods of giving back, be it volunteering and pro bono work or community engagement and community empowerment. Amplify your philanthropic voice, and set up your Impact Account today!
Founded in Philadelphia in 2018, Philanthropi is a revolutionary charitable giving by democratizing philanthropy through its giving platform, allowing everyday donors to seamlessly support their favorite nonprofit organizations.