DAFs have become popular in part because of their versatility, allowing donors to give when, what, how, and where is most favorable for them.
NPT finds charitable solutions for donors that make giving with DAFs as seamless and advantageous as possible. DAFs also offer several tax benefits over other forms of giving, and they can be linked as a complementary vehicle to other financial and estate planning tools, such as charitable remainder trusts, charitable lead trusts, and bequests. Some common uses for DAFs are:
Donate Now. Grant Later.
A DAF allows time for a donor to develop a philanthropic vision. Donors can make contributions to their fund, receive an immediate tax deduction and make grants to their favorite charities over time. Some donors make grants immediately after starting a DAF, while others take time to tailor a charitable giving strategy.
Create Multi-Year Commitments to Your Favorite Charities.
Donors can use their DAFs to support their favorite charities—once, or for years to come. DAFs allow donors to use specialized grant agreements, recurring grants and anonymous grants to help reach their charitable giving goals.
Convert Illiquid Assets into Philanthropic Capital.
DAF sponsors accept a wide variety of assets as contributions, including illiquid assets. These can include real estate, works of art, collections, and other tangible personal property. In recent years, donating illiquid assets to DAFs has become a more popular trend. Donors are looking beyond their stock portfolios to view their total wealth as potential gifts to charity.
Build a Giving Legacy.
Many donors find it important to involve their family in giving, and to encourage charitable giving in the next generation. DAFs offer donors the opportunity to establish their loved ones as secondary advisors and successors who gain full responsibility for the account—including management and grant recommendation—when the primary donor can no longer manage the account. Donors can also leave bequests to their DAFs with instructions to grant out either the balance or a percentage of the assets over time, ensuring a charitable legacy that lasts beyond their lifetime.
Give Across the Globe.
Donors can use their DAFs to make grants to international charities and NGOs while still receiving federal tax credit. Some DAF sponsors, like NPT, are uniquely qualified to assess the charitable eligibility of international grants using Expenditure Responsibility and Equivalency Determination, allowing international grantmaking to be a more integral part of a donor’s giving strategy.
Please Note: The information provided here is general and educational in nature. It is not intended to be, nor should it be construed as, legal or tax advice. NPT does not provide legal or tax advice. Furthermore, the content provided here is related to taxation at the federal level only. NPT strongly encourages you to consult with your tax advisor or attorney before making charitable contributions.
