The most common strategy for creating a Donor-Advised Fund (DAF) is relatively simple, donor-advised funds are a good option any time the donor wants to contribute (and get the tax deduction) now, but physically grants funds to the final charity at a later date.

A DAF is understood to include arrangements by which some 501c3 charitable organizations (including community foundations) establishes a separate fund or account to receive contributions from donors. In general, contributions to a DAF are treated as contributions to a public charity, thus providing donors some advantages over private foundations. 

For example, donors may claim a higher charitable contribution deduction (up to 50% of adjusted gross income (AGI) to a public charity vs. 30% to a private foundation).  Donor-advised funds are not subject to the Chapter 42 restrictions that apply to private foundations, such as the section 4941 self-dealing rules and the section 4942 annual payout requirements. At IPG, we work with you to help set up a DAF at reputable investments firms and act on your behalf to maintain its charitable purpose.

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