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What is a donor-advised fund and how does it work?

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A donor-advised fund (DAF) is a tax-advantaged financial account designed specifically for charitable giving. It's been described in various ways, such as a "401K for giving" or a vehicle to save more on taxes while donating to charities you care about. However, until recently, DAFs have primarily been a financial tool for the ultra-wealthy. Daffy, the Donor-Advised Fund For You™, is changing that. Daffy has created a modern, accessible DAF designed for everyone who wants to make a difference. So how does a DAF work? Once you open a DAF, like the one offered by Daffy, you contribute money to your charitable fund. This contribution is tax-deductible, just like a direct donation to a nonprofit. Your DAF also acts as an investment account, allowing your contributions to grow over time. 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. DAFs, especially those provided by investment or technology companies like Daffy, can handle this process, saving charities the hassle and costs. 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. Daffy takes the benefits of a DAF a step further. With Daffy, you can set a goal for how much you want to give each year and the platform will hold you accountable to it. Whether you're already a regular donor or just starting your charitable giving journey, Daffy is a great option for a DAF. It's not just a financial tool, but a community committed to making a difference.

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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