Achieve your charitable goals with a donor-advised fund

Choosing the best charitable giving vehicle for your situation can often feel overwhelming. You may want a continuing income stream for yourself or a family member, in which case a charitable gift annuity (CGA) might be the best option. If you are 70½ or older, a qualified charitable distribution (QCD) donated directly from your individual retirement account (IRA) might be ideal. Or you may prefer to arrange for a charitable bequest in your will or trust. There are many ways to achieve your philanthropic goals. If you are undecided about which option is best for you, consider one that allows you to make a charitable gift now, receive the tax benefit immediately, and decide how to distribute those funds later.

A donor-advised fund (DAF) simplifies charitable giving by consolidating contributions into a single account administered by a public charity. You receive a tax benefit in the year you contribute, even if you wait to recommend grants to recipients, such as WashU, in future years. The sponsoring organization handles recordkeeping, reducing your administrative tasks. Because assets in a DAF can be invested, they may grow tax-free, potentially increasing the amount available for charitable grants. If you have the resources now but want to thoughtfully build a long-term philanthropic strategy, a DAF may be a good fit.

While DAFs offer flexibility and tax benefits, they also have some important limitations. DAFs may charge administrative and investment fees, and contributions are irrevocable. Once you contribute to a DAF, the funds legally belong to the sponsoring organization. You can recommend grants to qualifying charities, but the organization will approve them only after confirming they meet all necessary guidelines. Note that DAFs cannot be used to satisfy personal pledges.

Setting up a DAF typically involves choosing a sponsoring organization — such as a community foundation, nonprofit, or financial institution — and opening an account with an initial contribution. If you would like to support WashU, the online tool DAF Direct offers an easy way to initiate a grant recommendation, provided your sponsoring organization participates. Current participating sponsors include Fidelity Charitable®, DAFgiving360®, and the BNY Mellon Charitable Gift Fund®.

To learn more about donor-advised funds or to begin the process, contact your financial advisor, speak with your DAF sponsor, or reach out to the Office of Planned Giving at WashU. With the right preparation, a donor-advised fund can be one way to help you work toward your charitable goals.