Complementary Philanthropy Using Both Donor-Advised Funds And Private Foundations

Charitably minded individuals once felt that they had to decide whether to use either a donor-advised fund (DAF) or a private foundation. Savvy philanthropists now strategize ways that the two can be used together to achieve charitable goals.

A DAF is a charitable giving vehicle that is established by a public charitable organization (a sponsoring organization). A donor may make a charitable contribution to a DAF and obtain an income tax deduction in the year of the contribution whether or not the funds contributed to the DAF are distributed to the ultimate charitable recipients during that year. While the sponsoring organization has legal control over the DAF, the donor (or another person nominated by the donor) makes recommendations for grants from the DAF to public charities. Many investment firms and community foundations sponsor DAFs.