What Are Donor Advised Funds?

As a donor, you want to know that your gift makes maximum impact.

Donor Advised Funds are an easy and flexible way to support the charities that you love. Donor advised funds are like charitable savings accounts. A donor contributes to the fund as frequently as they like and watches as their charitable investment grows tax-free. The donor receives immediate tax benefits and can recommend grants to their favorite charity whenever they are ready.

Donor advised funds are the fastest growing form of charitable giving and offer numerous benefits to donors:

  • Immediate tax benefits with a single tax receipt
  • Maximum tax deduction
  • Large cost savings when compared to private foundations
  • Ability to contribute non-cash assets/shares of stock
  • Continued investment of contributions over time
  • Tax-free growth
  • Easy management of gifts and grants

"Why wouldn't a donor like donor-advised funds?", asks Ray Madoff, a professor at Boston College Law School and an expert on trusts. "They're the best thing in the world for donors."

Here's how Donor Advised Funds work:

  1. You setup a giving account with your financial institution (Two of the largest Donor Advised Funds are with Fidelity Charitable and Schwabb Charitable).
  2. You make a contribution of personal assets (cash or stocks)
  3. You immediately receive the maximum tax deduction possible.
  4. You name your donor-advised fund advisors and charitable beneficiaries.
  5. Your contribution is invested and grows tax-free.

At any time, you can recommend grants from your account to your favorite charity.

If you have a donor advised fund, you can make a charitable grant to Five Talents today.