Donating time or financial support are two ways families across the United States support mission-driven organizations. Maximizing financial impact through donor-advised funds (DAFs) can be a powerful, long term and simplified way to show support for nonprofit organizations and important causes that align with family interests and passions.
DAFs continue to grow in popularity each year. According to the National Philanthropic Trust, contributions to DAFs reached an all-time high in 2021 at $45.74 billion, a 28.2% increase from 2020.
Simply defined, a donor-advised fund is a charitable giving account for donors and their families. It puts the power in the donor’s hands to recommend grants from their DAF to support their favorite community initiatives and nonprofit organizations.
A DAF is a simple, tax-efficient way to give to your favorite nonprofit organization or area of interest. All donor-advised funds are administered by a charitable sponsor, such as a community foundation. These charitable giving vehicles provide flexibility and important benefits to the donor, too.
Some DAFs, like those at San Diego Foundation, allow individuals to contribute any asset, such as cash, stock or real estate, take an immediate tax deduction, then support your favorite community initiatives or nonprofit organizations whenever you are ready. Because charitable assets in DAFs are invested, the potential for giving more over time is expanded.
For example, many donors at San Diego Foundation establish donor-advised funds as endowment funds. Over time, their initial charitable contribution grows through tax-free investments, and each year they can give out grants to any nonprofit in good standing as well as support impactful initiatives in San Diego, such as helping underserved youth develop into tomorrow’s innovators and engineers through our Science & Technology Program.
In short, donor-advised funds are the perfect way to personalize your giving, ensure that your money is supporting a cause you care about and maximize your tax deductions.
How Does It Work?
Charitable sponsors manage all the heavy lifting for donor-advised funds.
At San Diego Foundation, our Giving Team is your team of experts, helping you make the most impact with your charitable giving. We process your grants, maintain historical records of your philanthropy and provide you with regular fund statements to make tax reporting as seamless as possible.
Why Donor-Advised Funds?
DAFs are one of the best ways to maximize the impact of charitable dollars. In fact, they have become one of the most used choices in philanthropic opportunities today. Some of the benefits include:
- Choose Community Initiatives that Mean the Most – Actively engage in grantmaking to support community initiatives and nonprofit organizations that matter most.
- Compound your Giving – Grant together with other DAF holders to expand the power of community philanthropy.
- Instill Lasting Values – Engage other family generations in philanthropy to instill lifelong charitable values in younger relatives and set up a framework for multi-generational giving that honors charitable legacies.
- Simplify Giving – Leverage the SDF’s expertise to help process grants, maintain historical records of your philanthropy, and provide regular fund statements to make tax reporting as seamless as possible.
- Optimize Privacy – Give anonymously to the causes without being identified publicly.
- Work with Expert Advisors – Leverage the investment expertise of community foundations to grow charitable assets over time and strengthen grantmaking and social good power.
- Avoid Capital Gains – Donate appreciated securities to avoid capital gains tax and leverage contributions for a larger impact while also securing a better tax break.
Your Fund, Your Impact
Philanthropy is personal. Community foundations are uniquely positioned to strengthen the culture of philanthropy through voices like yours. Many donor-advised fundholders tell us that they give based on the advice of their peers.
Your advocacy and philanthropic support will directly impact quality of life for our communities. Your voice can change the culture of philanthropy and our shared world for generations to come.
When thinking about philanthropy, we know that impact is an important factor in deciding how to give. Together, we can explore how to open donor-advised funds or other types of charitable funds that best meet your financial priorities and personal values.
DAF Assistance from San Diego Foundation
Our Donor Services Team has the experience and knowledge to help you decide the best solution for your charitable giving needs.
Learn how setting up a donor-advised fund at SDF can help you accomplish your philanthropic goals, without adding any unnecessary time and stress to your busy schedule.
Or download the Essential Guide to Donor-Advised Funds eBook to learn more about DAFs.