Donor Advised Fund
A donor-advised fund (DAF) is a charitable giving account you establish at a public charity (called a “sponsoring organization”). You make an irrevocable contribution to the DAF and receive your full tax deduction immediately—even if your church doesn’t receive the money until later. After funding the DAF, you can recommend grants to qualified charities (including churches) whenever you choose.
Practical value: DAFs can streamline complex or multi‑year giving, allow recommending grants to a church over time, and centralize records. Remember that donors only advise; the sponsor must have ultimate control over distributions. Churches, as qualified 501(c)(3) organizations, can receive grants from DAFs and such grants are part of the sponsor’s charitable activities (and the donor’s deduction was taken at the time of contribution to the sponsor).
A DAF lets donors:
- Combine ("bunch") several years of giving into one tax year to exceed the standard deduction and unlock itemizing benefits.
- Take a large deduction in a high-income year when the tax value is greatest. Donate appreciated stock, crypto, or other assets without paying capital gains tax - while still deducting the full fair market value.
- Convert irregular or one-time windfalls (bonus, business sale, inheritance, stock vesting) into many years of future giving.
- Invest the balance inside the DAF, allowing it to grow tax-free for future charitable use.
Why donors use DAFs:
- One receipt for tax purposes, even if you fund multiple ministries over time.
- Flexibility - you decide when your church receives the grants.
- Privacy - you can give anonymously if desired.
- Simplicity - the sponsoring organization handles admin, tax reporting, and asset liquidation.
What donors need to know:
A DAF can give you one big deduction now while allowing you to support your church later, year by year. It also keeps all your donation records in one place and makes it easy to donate stock, crypto, or other complex assets.