CWG Insight Series: Donor-Advised Funds: A Strategic Approach to Philanthropy

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In the realm of philanthropy, donor-advised funds (DAFs) have emerged as a popular and effective tool for individuals and families seeking to manage their charitable giving. DAFs are often used by those who want to make sizeable contributions that are distributed over a period of time and who don’t want to undergo the burden and cost of establishing a foundation.

Understanding Donor-Advised Funds

A donor-advised fund functions as a charitable investment account. Donors contribute assets, such as cash, securities, or real estate, to the DAF. These contributions are immediately tax-deductible, regardless of whether the donor directs grants to charities immediately or over time.

Once assets are transferred to a DAF, the sponsoring organization assumes legal ownership and investment responsibility. Donors, however, retain the power to recommend grants to qualified charities. This separation of ownership and control allows donors to make strategic philanthropic decisions while benefiting from the expertise of the sponsoring organization.

Benefits of Donor-Advised Funds

DAFs offer a multitude of advantages for donors, including:

  • Tax Advantages: Donors receive an immediate tax deduction for the full value of their contributions, even if they don't direct grants to charities immediately.
  • Flexibility: Donors can make contributions of various asset types, including cash, securities, real estate, or even complex assets like artwork or private equity. Note: for cash, the annual donation limit is 60% of your AGI and for assets, it’s 30%.
  • Control: Donors retain the power to recommend grants to qualified charities when they choose, allowing them to align their giving with their evolving philanthropic goals.
  • Investment Growth: Assets within DAFs can be invested to generate tax-free growth, enabling donors to maximize their long-term philanthropic impact.
  • Simplicity: DAFs offer a streamlined and efficient approach to managing charitable giving, reducing administrative burdens, and allowing donors to focus on their philanthropic goals.

Types of Donor-Advised Funds

DAFs are offered by a variety of sponsoring organizations, including community foundations, national charities, and private foundations. The type of sponsoring organization can influence the fees associated with the DAF, as well as the range of investment options available. At Crown Wealth Group, we have partnered with Schwab Charitable to make the establishment and on-going management of a client’s DAF simple and streamlined.

Establishing a Donor-Advised Fund

Creating a DAF is a straightforward process. Donors can work with their Crown advisor and Schwab Charitable to establish their DAF. The process typically involves completing a simple application form and transferring assets to the DAF.

Utilizing a Donor-Advised Fund

Once a DAF is established, donors can recommend grants to qualified charities at their discretion. The sponsoring organization handles the grantmaking process, ensuring that funds are distributed to eligible charities in accordance with the donor's recommendations.


Donor-advised funds have become increasingly popular among philanthropic individuals and families due to their unique combination of tax benefits, flexibility, and control. These specialized accounts offer a strategic approach to giving, enabling donors to maximize their impact and align their philanthropy with their evolving goals. Whether seeking to support specific causes, provide ongoing funding to favorite charities, or establish a legacy of giving, donor-advised funds can be a valuable tool for individuals and families committed to making a positive difference.