Family Philanthropy and Donor-advised Funds

Families face choices when it comes to how to do their philanthropy. They give in different ways using different vehicles. Over the past 20 years an increasing number of donors and families are choosing donor-advised funds (or DAFs, for short) as the primary vehicle for meeting their philanthropic goals.

This online guide is for donors and families considering donor-advised funds, as well as for others, including advisors, seeking to learn more about the benefits and complexities of this important philanthropic vehicle. Whether you are a donor exploring a DAF for the first time or a philanthropic or wealth advisor working with families, this guide will help you answer key questions and determine whether a DAF is the right tool for you.

To get started, read the introduction and then browse the sections below at your convenience.

Getting Started: Understanding Donor-Advised Funds

Guide to Family Philanthropy and Donor-Advised Funds: Introduction

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An early choice every philanthropic family must make is: What is our purpose as a philanthropic family? What do we want to accomplish? How can we make gifts in a way that meets our needs and the needs of those we want to serve?

What are donor-advised funds?

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Think of a donor-advised fund as a personal philanthropy checking and savings account. An individual donor, couple, or family creates an account (a donor-advised fund) by transferring assets to a sponsor or sponsor organization, such as a community foundation, a religious federation, or a commercial gift fund.

Do you have examples of donor-advised fund case studies and success stories?

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There are many and varied reasons donors and families choose donor-advised funds as a primary giving vehicle. Here are a selection of real-life success stories highlighting some of the many reasons the DAF structure is so popular.

When is the best time to start a donor-advised fund?

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Donors and families can establish a DAF at any time, through a number of different sponsor organizations. Minimums can be as low as $5,000, although many start at $25,000 (and sometimes more).

What are the principal uses and benefits of donor-advised funds?

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Families choose donor-advised funds (DAFs) for a number of good reasons. Here are some of the most important

What are the important limitations and restrictions on using a donor-advised fund?

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Each sponsor organization will have its own set of rules and restrictions on the donor-advised funds they offer—so be sure read the fine print on fund agreements. However, in general, here’s what you need to know about DAFs

Finding a Host: Understanding Sponsor Organizations

What are sponsor organizations and what are the different types of sponsor organizations for donor-advised funds?

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Today, there are an estimated 1,000 or more DAF sponsor organizations in the U.S. Broadly, these sponsor organizations fall into three types: community foundations, single-issue non-profits, and national non-profits (which include both commercial gift funds and noncommercial organizations)

What services do sponsor organizations for donor-advised funds typically offer?

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Donor-advised fund sponsor organizations offer a wide range of services to donors. These services vary among individual sponsor types and organizations.

What questions should donors ask potential sponsor organizations when considering setting up a donor-advised fund?

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Before opening a DAF, donors need to be clear on the services, fees, and restrictions of a fund, as they vary widely among sponsor organizations.

Making the Right Choice: Questions for Donors and Their Advisors

What questions should an individual donor, couple or family ask themselves before opening a donor-advised fund?

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Before opening a DAF, families should reflect on and talk about their values and goals for their philanthropy—individually, and as a family—and their specific needs for what the vehicle should deliver.

What questions should a donor, couple, or family ask their advisors before setting up a donor-advised fund?

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Before opening a DAF, donor families should talk with their trusted professional advisors about the benefits and tax implications. Professional advisors might include the family CPA or attorney, financial or estate-planning advisors, heads of family offices, or professional philanthropic advisors.

How do donor-advised funds compare with private foundations and other family giving vehicles?

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When setting up a philanthropic vehicle, families often wonder whether to give directly to charitable organizations (check-book giving), or to set up a more formal planned giving vehicle, such as a donor-advised fund (DAF), private foundation, or charitable trust.

Learning More: Data, Stories, and Additional Resources

What other data, trends, and analysis exist on the establishment and use of donor-advised funds in the U.S.?

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Donor-advised funds are one of the fastest growing philanthropic vehicles. Here are the latest numbers, along with links to a variety of other data sources and analysis on the use and effectiveness of this important tool for giving.