If you would like to make a substantial tax-deductible charitable donation this year, but have the ability to spread the actual distribution of funds to specific charities over a number of years, a donor-advised fund (DAF) may fill that need. There are any number of reasons individuals choose DAFs, including making a substantial charitable donation in an exceptionally high-income year, to overcome the standard deduction, or as part of their estate plan. Here are some details about DAFs that will help you decide if you can gain any benefit from a DAF.
What is a DAF? – A DAF is a separate fund (account) set up within a public charity (sponsoring organization) to which a donor contributes cash or non-liquid assets. The donor then advises the sponsoring organization on how to invest and ultimately distribute the funds from the account as charitable gifts over the course of many years.