What is a donor-advised fund (DAF)?
A donor-advised fund is a tax-effective way to donate, accrue, and recommend grants to 501(c)(3) public charities. Think of a DAF as a charitable checking account with an investment component. An increasingly popular charitable vehicle, DAFs are an excellent way to both simplify your charitable giving and facilitate your strategic philanthropic goals. DAFs allow donors to take an immediate tax deduction for investing cash, stock, and other assets, but can grant specified amounts to the charities of their choice at a later time.
How does it work?
- Establish your DAF by making a tax-deductible donation to a public charity that sponsors a DAF program.
- Advise the investment allocation of the donated assets (any investment growth is tax-free).
- Recommend grants to qualified public charities of your choice.
Main advantages of a donor-advised fund
Donor-advised funds provide a number of benefits that direct donations to a charity may not, including the following:
- Simplicity: The DAF sponsor handles all recordkeeping, disbursements, and tax receipts.
- Flexibility: Timing of your tax deduction can be separate from your charitable decision making.
- Tax efficiency: Contributions are tax-deductible, and any investment growth in the DAF is tax-free. It is also easy to donate long-term appreciated securities, eliminating capital gains taxes and allowing you to support several charities from one block of stock.
- Family legacy: A DAF is a powerful way to build or continue a tradition of family philanthropy.
- No start-up costs: There is no cost to establish a donor-advised fund. However, there are often minimum initial charitable contributions to establish the DAF (typically $5,000 or more).*
- No transaction fees: Once approved, 100% of your recommended grant goes to your qualified public charity of choice.*
- Privacy if desired: Donors may choose to remain anonymous to the grant recipient.
*Sponsoring organizations generally assess an administrative fee on the assets in a DAF. These fees vary by the charity that sponsors a DAF program.
What can donor-advised funds do for BARCC?
DAFs provide an easy, flexible, low-cost method of giving that supports our work for survivors. These gifts are an essential part of the lasting changes made in the lives of survivors in need of our various programs and services.
If you already benefit from donor-advised funds, please make checks payable to Boston Area Rape Crisis Center and mail to the following address: 99 Bishop Allen Drive, Cambridge, MA 02139. BARCC’s tax identification number is 04-2974983.