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Donor-Advised Fund

What is a donor-advised fund?

A donor-advised fund is an investment vehicle administered by public charities through a financial institution. It allows investors to donate to charities with significant tax benefits.

  • A donor-advised fund is an investment vehicle administered by public charities through a financial institution.
  • Charitable investors can put money into these funds instead of donating cash directly to charities.
  • Donations to donor-advised funds grow tax-free and have flexible payouts.

A donor-advised fund is an alternative to donating cash directly to a charity. Most of these funds are administered by public charities that work with institutions (Fidelity, Schwab, or Vanguard). Donations to donor-advised funds grow tax-free and have flexible payouts.

Donor-advised funds have a few drawbacks. Once you contribute to these funds, you can’t draw them back. The funds don’t go immediately to charities, and when they do, it might not go to charities of the donor’s choosing. Also, there are significant donation minimums and annual fees.