Why a Donor Advised Fund is an ideal way to do your giving

Setting resolutions for 2024? If you’re thinking about how you can make a difference this year – be that establishing giving goals, making donations on a small scale, leveraging an upcoming liquidity event, or continuing to support nonprofits as an established philanthropist – opening a Donor Advised Fund is one of the simplest yet most effective ways to set yourself up for success.

What is a Donor Advised Fund, or DAF?

In plain terms, a DAF is a giving vehicle, or charitable bank account. The basic idea is that you put philanthropic funds into your DAF (contributions) and make grants from it to nonprofits you care about.

In reality, a DAF is much more. It makes it easy not only to give, but to give effectively. That’s why we believe it can be an ideal way to do your giving.

What’s so good about a DAF?

Within just a day, we can have you set up with a DAF that allows you to:

Read on to discover each benefit in more detail.

1. Give more

Because contributions to a DAF are treated in the same way as any donation to a public charity, they’re usually eligible for tax relief. In the US, you’ll receive an immediate tax deduction every time you contribute to your DAF, and in the UK, your contribution may be eligible for Gift Aid.

That’s not all. Most DAFs don’t just accept cash, but a wide variety of tax-advantaged assets you can’t usually donate directly to charity, including public and private securities, crypto, and others. For US members, you can deduct your cash donations up to 60% of your adjusted gross income (AGI) and up to 30% for stock; this is significantly higher than the deductions for private foundations which are capped at 30% of your AGI for cash donations and 20% of AGI for stock. In addition, US members can invest their DAF funds in a variety of pools to suit different grant-making time horizons, so the funds can grow tax-free while you make important decisions about when, where, and how much to give.

All of that means you can maximize your philanthropic funds to meet – maybe even surpass – your charitable goals.

2. Give flexibly

As well as accepting a range of assets, most DAFs allow you to contribute and grant on your own timeline, to any nonprofits in the world. That means a DAF is an ideal giving tool for a large wealth event, when more time is needed to develop a thoughtful strategy.

3. Give efficiently

DAFs make giving easy by eliminating the administrative pieces that take up your time, money, and bandwidth when using traditional vehicles like private foundations. Our Member App allows you to submit contributions and grants at the click of a button. There, you can keep track of all transactions in one place, and view your giving by cause area to help you monitor progress against goals and better understand the impact of your giving. You can involve important partners, including family members and external advisors, in your giving decisions. Meanwhile, our team of experts handle all the logistics and due diligence behind the scenes, to ensure your contributions and grants land quickly and safely.

4. Give securely

We take a rigorous approach to due diligence, so that our members can be confident their grants are funding positive change. Find out more about our impact-first grant-making.

5. Give effectively

Our team are experts in global, complex grant-making. In service of our mission to maximize impact, we invest time and effort in making catalytic grants to new, unique, and complex organizations others shy away from because of the extra vetting required. We do that so our members can support the most innovative organizations and initiatives around the world. To date, we’ve processed grants to grantees in over 40 countries.

Because DAFs take the hassle out of giving, and allow you to take action on your own timeline, you can be more intentional in deciding where to give. We think that’s crucial because some nonprofits are more impactful than others, which means supporting the most effective can make your money go further. Discover why we believe in doing the most good possible.

That’s where the rest of our services come in. We identify high-impact funding opportunities, offer one-to-one philanthropic advising to help you develop a giving portfolio tailored to your values, and host events with fellow entrepreneurs and change-makers around the world. With a Founders Pledge DAF, you can take advantage of these opportunities and our expert support in the knowledge that you have the infrastructure in place to give whenever you’re ready to do so.

I'm interested! What's the next step?

Like everything about a DAF, we’ve made getting set up (including transferring from an existing account) straightforward. Our expert team is with you every step of the way.

To find out more about a Founders Pledge DAF, read our information pack for US members or for those in the UK and Germany. If you’re located elsewhere, we can help work out the best giving vehicle for you.

To open a DAF or discuss your options, reach out to your Community Manager or get in touch.

Founders Pledge cannot provide tax advice and the above is not intended as such. Please consult with your tax or financial advisor for a full understanding of what moving money into the charitable sector (including using a DAF) means for you.