Giving
donor-advised fund
A donor-advised fund is a giving account. You give cash or assets to a sponsor, take the tax deduction in that year if you itemize, then recommend grants to churches and charities over time.
A donor-advised fund (DAF) is a giving account held by a charitable sponsor. The IRS describes it as a fund in which a donor can, because of being a donor, advise the fund how to distribute or invest the amounts in it. You give to the fund first. You recommend grants later.
For example: you give $40,000 of cash to a DAF in December. If you itemize, you may be able to deduct it for that year. Over the next several years you recommend grants of $10,000 a year to your church and other ministries.
The gift to the fund is final. The sponsor holds legal control of the assets, and the IRS says you need a written acknowledgment from the sponsor that it has exclusive legal control. Your role is to advise, not to direct.
Why it matters: a DAF lets you decide the tax timing in a high-income year and the giving timing over years. It also keeps records in one place. It is useful for families with a big income event, such as the sale of a business or a stock vesting. Rules for deductions change, so ask your CPA.
Read the full guide to donor-advised funds for Christian givers.
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