What is a donor-advised fund (DAF)?
The fastest growing charitable giving option in the country.
Think of it as an account dedicated to making philanthropy happen. And it’s maintained and operated by a sponsoring organization—like AEF.
Why do advisors recommend DAFs for charitable giving?
-
No setup charge
-
Funds future giving
-
Simplifies charitable giving & tax reporting
-
Most assets grow tax free
-
Builds legacies & funds future giving
There’s no wrong way to do the right thing.
Between DAFs and private foundations, what’s the best option? It depends on the kind of positive impact donors want to make.
FAQs
donor-advised fund
Private Foundation
Are the donations tax deductible?
In accordance with applicable law.
In accordance with applicable law.
Does it allow grants to 501(c)3 organizations?
Does it allow grants to non-501(c)3 organizations?
Donations can be made to some 501(c)4 organizations.
Are there any start-up costs?
Initial donation, which varies by sponsor/fund manager.
Varies depending on state and locality.
Tax on investment income?
*Some investments must pay unrelated business income tax (UBIT).
1-2%
Able to grant anonymously?
Does this giving option accept complex assets?
Are there fees?
Vary by sponsor/fund manager.
There are costs incurred to hire a staff to administer the foundation.
Does this option allow for donations to political causes/candidates?
Is there an IRS minimum distribution requirement?
5% minimum distribution for private foundations is an annual requirement.
Functions of a DAF
A DAF is ideal for someone looking for a flexible giving option that gives the donor the ability to include their family in any giving recommendation, and to easily appoint a successor advisor. A DAF allows charitable dollars to grow tax-free and allows a donor to recommend an anonymous grant to a wide-spectrum of causes or charities.
Functions of a Private Foundation
A private foundation is typically family-funded and requires staff to administer the foundation. Even with a hired staff, this can be a lot of work for a donor to run. There are some IRS minimum distribution requirements, and there is no anonymity when giving to causes and charities.
We understand the significant impact cause-neutral giving can make.
As a cause-neutral sponsor, we offer an unbiased approach to giving—allowing for more freedom to recommend 501(c)3 charities for grants. AEF allows the donor to decide where to recommend grant dollars.
Plus, by working with financial advisors, donors, and firms, we offer a people-driven approach to philanthropy.
American Endowment Foundation (AEF) by the numbers.
$1.3 billion
$5 million
34,000+
Making an Impact
With so much to consider, it’s important to approach your charitable giving strategically.
Learn More