Definition
What is a donor-advised fund?
A donor-advised fund is a charitable giving account. You contribute cash or appreciated assets, take an immediate tax deduction in the year of the gift, and then recommend grants to charities over time. The assets can be invested and grow tax-free while they wait to be granted.
Donor-advised funds are useful for “bunching” several years of charitable giving into one high-income year to maximize the deduction, while still spreading the actual gifts to charities over time.
Contributing appreciated stock instead of cash can also avoid capital-gains tax on the appreciation, making the gift more efficient for both you and the charity.
This definition is for educational purposes only and does not constitute investment, tax, or legal advice. Rules and thresholds change; consult a qualified professional about your situation.