What are the differences between donor-advised funds and traditional giving?

What are the differences between donor-advised funds and traditional giving?

Donor-advised funds (DAFs) are charitable giving accounts that allow donors to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time. Traditional giving typically involves direct donations to charities without the intermediary of a fund.

What are the tax benefits of using a donor-advised fund?

With a donor-advised fund, you can receive an immediate tax deduction when you contribute, and your investments can grow tax-free until you decide to distribute them to charities.

Are there any fees associated with donor-advised funds?

Yes, donor-advised funds often have administrative fees, which can vary by provider. It's important to review these fees before setting up a fund.

Can I recommend grants to any charity with a donor-advised fund?

Generally, you can recommend grants to any IRS-qualified public charity. However, some funds may have specific guidelines on eligible organizations.

Which option is better for long-term giving?

It depends on your goals. Donor-advised funds offer flexibility and potential for growth, while traditional giving is straightforward and immediate.