Select a donor-advised fund that’s right for you
If you’re reading this, you’ve likely been thinking about opening up a donor-advised fund (DAF), but you may still have questions about whether a DAF is the right vehicle for your giving, if so, which DAF provider is the best fit?
Goodnation Philanthropy Advisors has put together this helpful guide to answer some of your questions.
First, what is a donor-advised fund?
A DAF is an account to set aside funds specifically for charitable giving.
What are the benefits of opening a donor-advised fund?
Many donors establish a DAF to help sustain their charitable giving over time. These donors know they want to be philanthropic, but perhaps they haven’t decided yet what causes they would like to focus on or which nonprofits they would like to support. Knowing they have a certain amount of dollars set aside for philanthropy, donors with DAFs are able to plan out their giving over a timeline that makes sense for them.
Additionally, rather than receiving and having to manage tax receipts per donation made to individual nonprofits, you receive one tax benefit at the moment you open your DAF account.
Lastly, DAF funds can typically be invested to accrue interest over time, so you may ultimately have more resources to donate over time than you initially planned.
How do I make a donation through a donor-advised fund?
Once you’ve selected which nonprofit organization(s) to support, you can easily send funds directly from your DAF to your selected nonprofits, typically through your online DAF portal.
Goodnation provides gift instructions using your DAF here, and we’re also on hand to guide you through the process.
How does Goodnation work with DAFs?
Goodnation’s mission is to bring more resources to urgent causes and impactful nonprofits. Currently there is over $141 billion in donor-advised funds across the country. This is real money that can make a significant impact on urgent needs our communities are facing today. Goodnation wants to do all we can to help donors make thoughtful and timely decisions on where to direct their philanthropy, and we’re proud to help DAF holders make meaningful giving decisions.
We also want to help donors strategically prepare to achieve their philanthropic goals, which, for some, means opening a donor-advised fund for the benefits listed above.
What to look for in a donor-advised fund
There are many elements to consider when choosing which institution to hold your charitable funds with. Let’s take a look:
Initial account contribution: The amount required to open a donor-advised fund account varies by DAF sponsor.
Minimum gift amount: Some donor-advised funds require a minimum donation amount for each gift that you make to a nonprofit, while others waive a minimum, allowing a gift of any size. Having an idea of what size gifts you would like to make will allow you to focus on DAFs that best suit your needs.
Interest rate: How much will the funds in your DAF account grow over time? If you hope to increase your potential giving resources over time, then we recommend assessing the investment opportunities and strategies of the DAF sponsors you are considering.
Fees: What are the fees associated with the DAF? How will this affect your overall balance available or giving?
Personal guidance: Does the DAF institution offer personal guidance on which nonprofits to give to and what size gift will make an impact? Most DAF sponsors only offer this level of personalized support for donors with a high minimum account blanace. In this case, Goodnation Philanthropy Advisors is a great resource to support your philanthropic journey!
Impact: What is the track record of the donor-advised fund? Have they successfully empowered their clients to make a meaningful impact?
Donor-advised fund options
There are three main types of donor-advised funds - national, community foundations and single-issue.
Community Foundation Donor-Advised Funds: Many community foundations offer DAFs to their members. Most community foundations focus on a specific geographic area, so their DAF is a great option for donors interested in supporting their local community.
Single-Issue Donor-Advised Funds: Single-issue DAFs focus on a specific issue area, typically around a university or a faith-based organization. Single-issue DAFs are great for donors who want to support a specific cause over time.
National Donor-Advised Funds: National DAFs can be found at most of the well-known financial institutions, such as Fidelity, Schwab and Vanguard, as well as smaller, more boutique institutions. National DAFs are the most popular option, as they allow donors maximum flexibility in their giving.
Selecting the donor-advised fund that’s right for you
Now that you have a better idea of the benefits of a donor-advised fund and the factors to consider when selecting one, you can more confidently research the options in order to find the best fit for you.
Don’t hesitate to reach out to donor-advised fund sponsors to talk through their offer with you, so you can better understand how they align with your philanthropic goals.
Expert guidance on directing your donations
Whether you’re just starting out on your giving journey or are an experienced donor, Goodnation provides expert advice and tailored partnership that will help you address urgent issues, improve outcomes for those in need and create lasting impact. Contact us to learn more about how we can help you direct your giving in a meaningful way.
