What should I know about Donor-Advised Funds?

What is a donor-advised fund (DAF)?
According to the IRS, a donor-advised fund is an account of contributions made by individual donors but maintained and operated by a sponsoring 501(c)(3) organization. Once the donor makes a contribution, the sponsoring organization has legal control over it, but the donor retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.

What is the current state of donor-advised funds?
DAFs continue to surge past nonprofits and foundations in accumulating charitable assets. Currently, DAFs are now worth almost one third more than they were before the recession started in 2007, says a new Chronicle of Philanthropy survey of 134 funds (Don’t have a Chronicle subscription? Access for free online through the Tulsa City-County Library).

Data from the National Philanthropic Trust’s recent 2012 Donor-Advised Fund Report, confirms the growing trend of DAFs, and indicates that DAFs grew in every category—number of funds, contributions, assets and grants–including a whopping 17.5% increase in assets.

What is the future of donor-advised funds?
National Philanthropic Trust predicts that this growth will continue and possibly accelerate.

How can my nonprofit benefit from donor-advised funds?
The Chronicle highlights key ways to get a slice of the DAF pie in “How Charities Can Tap into DAFs”, including connecting with your local community foundation, ensuring your organization is listed in donor databases, and polishing up your GuideStar and Charity Navigator profiles as many commercial funds refer their donors to these websites.

What are the drawbacks of donor-advised funds?

What are the advantages of donor-advised funds?

Written by Alyssa Dossett for the AFP Eastern Oklahoma July 2013 NewsRaiser.

Image courtesy of Ambro / FreeDigitalPhotos.net

Add new comment