What is a donor-advised fund? A donor-advised fund (DAF) is a type of giving program that allows you to combine the most favorable tax benefits with the flexibility to easily support a charity such as Discovery Eye Foundation. DAF’s allow you to simplify your charitable giving and meet your philanthropic goals.
In addition to the ease of setting up a DAF, over a private foundation, there are also tax advantages.
If you give private stock to a foundation you can only deduct your cost basis, but if you give it to a DAF you can claim the full market value as a charitable deduction–without paying taxes on the appreciation.
If you donate publicly traded appreciated stock to a private foundation, you can claim a deduction for its full market value, offsetting a maximum of only 20% of your adjusted gross income each year. But if you donate appreciated property (including private stock and real estate) to your DAFs it can offset 30% of your AGI.
If you give cash to a private foundation it can only offset 30% of your income, compared with 50% for a DAF.
How does it work?
- Establish your DAF by making an irrevocable, 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, such as Discovery Eye Foundation, with the option of being recognized or remaining anonymous.