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Donor Advised Fund (DAF)

A charitable giving vehicle that allows donors to make an irrevocable contribution, receive an immediate tax deduction, and then recommend grants to charities over time.

Vehicle Source: Billionaire Wealth Strategies Verified: 2026-04-07

Definition

A Donor Advised Fund is a charitable giving account administered by a sponsoring organization. The donor makes an irrevocable contribution (cash, stock, or other assets), receives an immediate tax deduction, and then recommends grants to qualified charities over time. The fund grows tax-free between the contribution and distribution.

How It Works

The donor contributes to the DAF and receives a tax deduction in the year of contribution. Contributed assets are invested and grow tax-free. The donor then recommends grants to IRS-qualified charities on their own timeline. There is no requirement to distribute in the year of contribution.

DAFs are especially powerful for "bunching" charitable deductions. Instead of giving $20,000 annually (potentially below the standard deduction threshold), an entrepreneur contributes $100,000 in a single high-income year, claims the full deduction, and distributes grants over the subsequent five years.

Contributing appreciated stock or other assets avoids capital gains tax on the appreciation while still providing a deduction for the full fair market value.

When Entrepreneurs Use This

High-income years: Bunching multiple years of charitable giving into a single deduction
Business sale years: Offsetting a large capital gain with a substantial DAF contribution
Appreciated asset disposal: Donating appreciated stock instead of selling and donating cash
Simplified giving: Consolidating charitable giving through a single account rather than managing multiple donations

Dew Wealth Perspective

DAFs pair with the CRT for comprehensive charitable planning. The DAF handles simpler, flexible giving while the CRT provides structured income and larger-scale asset transfer. The Linchpin Partner coordinates the timing of DAF contributions with the annual tax strategy to maximize deduction value.

Frequently Asked Questions

Can I get the money back?

No. Contributions to a DAF are irrevocable. However, you retain advisory privileges on which charities receive grants and when.

What's the minimum contribution?

Minimums vary by sponsoring organization. Major providers like Schwab, Fidelity, and Vanguard have minimums as low as $5,000.

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