What is a Donor-Advised Fund (DAF)?
A Donor-Advised Fund (DAF) is a popular, flexible, simple, cost-effective charitable-giving tool. It provides an alternative to direct giving or the creation of a private foundation. Donors benefit from administrative convenience, cost savings and tax advantages. On August 17, 2006, President Bush signed the Pension Protection Act of 2006. This legislation provides a legal definition of these funds, a list of prohibited payments to donors and advisors to a DAF, new rules regarding what grants can be made from a DAF and the documentation required for all contributions to these funds. A DAF, sometimes called “a foundation in a box,” involves less work, complexity and cost than a private foundation. The typical minimum is $10,000. Services to establish and maintain a DAF are available at community foundations; nonprofit organizations; commercial sponsors like Vanguard, Fidelity and Schwab and independent sponsors like the National Philanthropic Trust. The charitable contribution triggers
