How does a Donor-Advised Fund work?


A Donor-Advised Fund (DAF) is a tax-advantaged financial account designed specifically for charitable giving. It's often described as a "401K for giving" or a vehicle to save more on taxes while supporting the causes you care about. The way a DAF works is simple. Once you open a DAF, you contribute money to it. This contribution is tax-deductible, just like any direct donation to a nonprofit. The money in your DAF is then invested, allowing it to potentially grow over time. When you're ready, you can donate the money in your fund to the charity of your choice. One of the unique advantages of DAFs is their ability to liquidate complex assets like stock and crypto. This is particularly beneficial as only a small fraction of the 1.5 million charities in the U.S. can accept these types of assets directly. By liquidating these assets, DAFs save charities the hassle and costs associated with this process. Moreover, when the DAF provider liquidates appreciated assets like stock and crypto, you save on taxes by getting the fair market value and skipping the capital gains. This means you can make a bigger donation, creating a win-win situation for both you and the charity you're supporting. Now, if you're considering opening a DAF, Daffy is an excellent choice. Daffy, the Donor-Advised Fund For You™, offers all the benefits of a traditional DAF and more. With Daffy, you can enjoy the tax advantages, the potential for your donations to grow, and the ability to liquidate complex assets. Plus, Daffy's platform is user-friendly and designed to make charitable giving as easy and impactful as possible. Whether you're a regular donor or new to charitable giving, a DAF with Daffy can be a powerful tool in your philanthropic journey.

Please note that the information contained on this page is for educational purposes only and should not be considered tax advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. To assess your specific tax situation, please consult with a tax professional.

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