Donor-Advised Funds: Your New Best Friend?

A donor-advised fund is one of many types of funds that an individual, family, or business can establish with the Community Foundation. You’re likely more aware of donor-advised funds than other types of funds because they are frequently covered in financial media and also because your organization might have received grants from donor-advised funds. 
 
The team at the Community Foundation is happy to talk anytime to help demystify these popular vehicles. At the very least, however, you’ll want to check out the recently-released DAF Fundraising Report that sheds new light on the overall role of donor-advised funds in philanthropy and the significant value donor-advised funds provide to charities. 
 
For example, the report revealed that when a donor starts giving from a donor-advised fund, their annual giving increases by 96%! Donor-advised funds are also helping keep philanthropy strong. According to the report, the number of donors using donor-advised funds has grown by 79% in an environment where the number of other types of donors has declined by 6%. 
 
It’s absolutely worth your time to learn the basics of how a donor-advised fund works. You and your team also should consider developing strategies to identify and cultivate relationships with your donors who are using their donor-advised funds to support your organization. Dollars in donor-advised funds are already set aside for charitable giving, and it’s very convenient for donors to use their funds to support favorite organizations–like yours.
 
It’s also important to know that the team at the Community Foundation encourages donors to give directly to their favorite charities when that’s the best strategy to achieve a donor’s estate planning, tax, and charitable goals. Many times, though, both the donor and the charity benefit from the donor using a donor-advised or other type of fund at the Community Foundation. Examples include cases where the donor wants to give a complex asset, such as real estate or closely-held stock, or needs to plan out several years of giving to address fluctuating income levels and tax liability. 
 
We are always happy to review how the Community Foundation works with donors through donor-advised funds and other vehicles to support your organization and others in the community. We look forward to hearing from you! 
 
This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.