What Is a Donor-Advised Fund (DAF)?
A simple, flexible and tax-advantageous way to invest in the future of our arts community.
A donor-advised fund (DAF) is a charitable investment account that is set up for the sole purpose of supporting nonprofits. Individuals can contribute cash, stocks, or other assets into the DAF and receive an immediate tax deduction. Those funds are invested for tax-free growth and the individual can recommend donations to charities of their choice over time.
Donor-advised funds are the fastest-growing charitable giving vehicle because they are the easiest, and most tax-savvy way to give to charities like Anchorage Concert Association.
How does a donor-advised fund work?
- To establish the fund, an individual makes an irrevocable tax-deductible contribution (cash, stock, real estate, etc.) to a sponsoring organization, community foundation or financial institution. Individuals receive a tax receipt and tax benefits when funds are deposited into their DAF.
- The DAF sponsoring organization oversees those funds as they grow tax free.
- The assets within the fund now legally belong to the sponsoring organization but the DAF account holder retains advisory privileges over disbursements made from the DAF in addition to the investment strategy.
- DAF account holders can recommend single or recurring donations to charitable organizations. Funds in a DAF can only be used to support organizations that are tax-exempt 501(c)(3) and classified as public charities under 509(a).
- Once the DAF sponsoring organization approves, the recommended donation is made to the qualified charitable organization, such as Anchorage Concert Association.
What are the benefits of giving through a donor-advised fund?
- Support a cause you believe in through strategic giving, over time.
- Maintain family involvement in charitable decisions.
- Create a lasting legacy.
- Take advantage of immediate tax benefits with the ability to distribute funds later.
- Consolidate all your charitable giving.
- Ensure that you meet and/or exceed standard deductions by combining donations of stock to a DAF.
Here’s how you can get started.
The most common ways for Alaskans to give through a DAF is to establish a giving fund through a community foundation, or through your financial investment firm. Here are links with information on how to set up your DAF at some institutions commonly utilized by our Anchorage Concert Association supporters: