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Advisor Blog
December 2, 2021
Donor Advised Funds Grow in Popularity

For nearly 90 years, charitably-minded individuals and families have established Donor Advised Funds (DAFs) to help carry out their philanthropic wishes. Popularity of the DAF steadily grew, beginning in the 1990s, eventually resulting in official recognition in the Internal Revenue Code under 2006 tax law updates. Today, over one million DAF accounts hold nearly $160 billion in charitable assets, according to the latest numbers.

The growth of the DAF as a useful charitable giving tool has made this vehicle something of a celebrity. You and your clients no doubt have seen articles about DAFs pop up in mainstream financial publications, as well as in academic journals. A top priority for our team is keeping up with proposed legislation and commentary about charitable giving, including particular vehicles such as DAFs. As you talk with your clients about options for their charitable giving plans, please reach out. We would be happy to share perspectives and ideas that take into consideration current trends and legislative developments. 

As you’re likely aware, a DAF enables clients to establish a specific account for charitable giving. Your clients make a tax-deductible contribution of cash or other assets to the fund, and then recommends grants to favorite charities during the current year and in future years depending on your clients’ goals and plans.

CFAAC has its finger on the pulse of the community’s most pressing issues. An unrestricted fund provides your clients with an opportunity to support community needs that can’t be identified until the future. One of the biggest benefits of a community foundation is its perpetual structure that allows support to nonprofits to evolve over time as priorities in the county shift. 

Your clients can also set up a field-of-interest fund to target charitable giving to specific areas of community need (such as education, health, environment, or the arts) and to establish parameters for grant making under the ongoing guidance and expertise of the Community Foundation’s staff. Plus, field-of-interest funds can be a wonderful alternative to a scholarship fund and accomplish your clients’ charitable goals even more efficiently and effectively. For our list of field-of-interest funds, click here.

Lastly, your clients may want to contribute to a designated fund that allows them to focus charitable giving on a specific agency or purpose. Over time, CFAAC’s staff manages the distributions from the fund according to the terms the clients establish. For our list of designated funds, click here.

 


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