Benefits of Donor-Advised Funds

As philanthropy changes to meet the demands of an increasingly complex and interconnected world, donor-advised funds (DAFs) are growing in popularity. Active donors supporting a wide range of causes, advisors providing a greater suite of professional resources to their clients, and all parties searching for a deeper knowledge about the charitable landscape are discovering DAFs as an effective and efficient method of philanthropic giving.

The impact of DAFs on the world of philanthropy is growing as more donors turn to DAFs to meet their philanthropic goals. As detailed in our 2021 DAF Report:

  • In 2020, contributions to DAFs accounted for 10% of all charitable giving.
  • Donors granted $34.6 billion to nonprofit organization from their DAFs in 2020.
  • In 2020, donors contributed $47.8 billion to their DAFs.
  • There are now more than one million DAF accounts.

What are the Benefits of Donor-Advised Funds?

DAFs have become popular in part because of their versatility; allowing donors to give when, what, how, and where is most favorable for them. There are many reasons why donors choose a donor-advised fund as a philanthropic giving vehicle. Charitable giving with a donor-advised fund can be a tax-efficient way to build a charitable legacy. Benefits of a donor-advised fund include:

  • Contributions via DAFs help donors maximize tax benefits.
  • Donors can contribute immediately, build a philanthropic strategy and recommend grants when ready.
  • Charitable assets may grow over time, making more charitable dollars available to nonprofits.
  • DAFs provide streamlined grantmaking, helping philanthropic dollars reach nonprofits quickly and efficiently.
  • DAF sponsors handle all due diligence and reporting, simplifying organization and administration.
  • DAFs can be used to facilitate a charitable legacy, dovetailing conveniently with estate planning.
  • Donors can choose how they are acknowledged and what personal information they wish to share when making grants from their DAFs.
  • DAFs can be useful in the development of donors’ philanthropic vision, strategy and philosophy.
  • DAFs can accept as contributions a wide range of assets such as cash, stock, cryptocurrency and real estate.
  • Donors can support international charities and NGOs and still being eligible to claim a federal tax deduction.

Learn more about donor-advised funds

Learn the differences between a donor-advised fund and a private foundation.
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NPT curates statistics from recent studies and reports on charitable giving in the U.S.
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Learn how donor-advised funds can be a major factor in your philanthropic goals.
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DAF Guides and Guardrails

As detailed above, DAFs are highly effective and efficient vehicles for charitable giving. There are certain rules and guidelines DAF donors must follow, however. Keep these facts in mind as you begin your philanthropic journey:

Contributions to a DAF are irrevocable. Once you contribute funds to your DAF, you cannot get the funds back and they cannot be used to provide any financial benefit to you or your family.

Contributed funds must be used exclusively for charitable purposes.

DAF providers usually require a specified minimum contribution to open a DAF.

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DAFs can only process grant requests to qualified charitable organizations or for charitable purposes.

DAF sponsors assess fees on the DAF balance to cover costs associated with managing and administering the DAF.

DAFs do not have a payout requirement by law, but most DAF sponsors enforce minimum account activity policies.

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Learn more on our DAF FAQs page.

 

Benefits of NPT GivingPoint

NPT GivingPoint, our online giving portal, provides a streamlined way to manage your DAF whether you’re recommending a grant now or planning for long-term impact. With NPT GivingPoint, both donors and their advisors can:

  • Open a DAF account, submit a contribution agreement and recommend grants in minutes.
  • Easily navigate accounts via laptop, phone or tablet.
  • Take advantage of an extensive library of research, FAQs and step-by-step guides.
  • Easily check fund balances and contribution history.
  • Research and explore thousands of nonprofit organizations in one place.