What is a Donor-Advised Fund?

Donor-advised funds (DAF) are financial accounts used for the purpose of giving money to charity. They allow individuals to put money aside tax-free for the organizations and causes they care most about. They are preferred by many including billionaires because they provide a better system for giving, as they allow people to schedule donations automatically to the organizations they support, and they are tax-efficient. People can contribute assets like stocks or ETFs to a DAF and not have to pay capital gains taxes on those assets, which is a true win-win. Unfortunately, not many charities can accept stock and crypto donations. But with Daffy, individuals can donate to any of the over one and a half million charities in the US whenever they want. Daffy is a provider of DAF that makes it accessible for anyone to open an account with lower minimums and fees.

Everyone is talking about donor-advised funds, but have you ever wondered why billionaires are using donor-advised funds today? What is a donor-advised fund? A donor-advised fund is a tax-deductible financial account for the express purpose of giving money to charity.

Just like you have an individual retirement account for retirement savings or a 529 plan for college savings, donor-advised funds allow you to put money aside tax-free for the organizations and causes that you care most about.

So why should you use a donor-advised fund? There are two big reasons why people love using donor-advised funds.

The first reason is that donor-advised funds are a better system for giving.

If you have a set number of organizations that you support every year, maybe with the same amounts, a donor-advised fund lets you fund the account and then schedule those donations so that they automatically get to the organizations you care about when they need the money most.

The second reason that people love donor-advised funds is because they're incredibly tax-efficient.

If you're like most people, your income varies year to year.

Some years you have good years, some years not so good.

A donor-advised fund lets you put money aside for charity during those good years where normally your tax bill would be the highest.

Not only can you put money in the donor-advised fund, but that money is invested tax-free so it grows while it's in the fund.

And then when you have the occasion to give, you have the money available anytime you need it.

Donor-advised funds are even better if you have investments like stocks, ETFs, or crypto.

When you contribute assets like stocks or ETFs to a donor-advised fund, you never have to pay capital gains taxes on those assets.

That's more money for you and your account and more money for the charities that you want to donate to.

It's a true win-win.

Unfortunately, out of the over one and a half million charities in the United States, only about 1,000 can accept stock and crypto donations.

With a donor-advised fund though, you are free to give to any of those charities across the country whenever you want.

So who can open up a donor-advised fund? Well, traditionally most providers limited these accounts due to their high minimums and fees just to the wealthy.

But with Daffy, anyone can open up a donor-advised fund and join a community of thousands of generous members.

So if you're looking for a better system for giving that will lower your tax bill and increase your impact, come to Daffy and open up a donor-advised fund today.

Daffy is the donor-advised fund for you.

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.