A donor-advised fund, or DAF, is like a charitable investment account for the sole purpose of supporting charitable organizations you care about. When you contribute cash, securities, or other assets to a donor-advised fund at a public charity, like Fidelity Charitable, you are generally eligible to take an immediate tax deduction. Then those funds can be invested for tax-free growth, and you can recommend grants to any eligible IRS-qualified public charity.
You want your charitable donations to be as effective as possible when you give. Donor-advised funds are the fastest-growing charitable giving vehicle in the United States because they are one of the easiest and most tax-advantageous ways to give to charity. Let’s take an in-depth look at how a DAF works.
Make a tax-deductible donation
Establish a Giving Account and then donate cash, stocks, or non-publicly traded assets such as private business interests, cryptocurrency, and private company stock to be eligible for an immediate tax deduction. A contribution to a donor-advised fund is an irrevocable commitment to charity; the funds cannot be returned to the donor or any other individual or used for any purpose other than grantmaking to charities.
Grow your donation, tax-free
While you're deciding which charities to support, your donation can potentially grow, making available even more money for giving. Most sponsoring organizations have a variety of investment options from which you can recommend an investment strategy for your charitable dollars.
Support charities you love, now or over time
You can support virtually any IRS-qualified public charity with grant recommendations from the donor-advised fund—from your local homeless shelter to your alma mater or religious institution. The public charity sponsoring your account will conduct due diligence to ensure the funds granted go to an IRS-qualified public charity and are used for charitable purposes. A Fidelity Charitable Giving Account is a great way to support charities you love at a pace that is comfortable for you.
What if you could support your favorite charities with just one donation? That's the power of a donor-advised fund. Fidelity Charitable's is called the Giving Account.
Watch this quick video to see how it works. (02:43)
Giving non-cash assets is often more tax-advantageous than giving via cash or credit cards, but it is difficult for many charities to accept these charitable contributions. Contributing assets other than cash is simple with a Giving Account. In some cases, it’s possible to transfer stock directly from your brokerage account with the click of a button. See what you can donate.
Assets generally accepted include:
Once you have funded your donor-advised fund, you may recommend an investment strategy for your account—potentially growing your account and providing you with more dollars to grant to charity. Many sponsoring organizations also have programs allowing you to nominate your financial advisor to manage the investment of your charitable funds.
The Fidelity Charitable Giving Account has no minimum initial contribution requirement and one of the lowest annual fees of any donor-advised fund. Total fees for a Giving Account typically amount to about 1% of the balance. That's generally less than the operating costs associated with a private foundation or the fees for donating with a credit card.
With a donor-advised fund, you don’t have to keep track of every gift acknowledgment from every charity you support—just the receipts from your DAF contributions. When you’re ready to support your favorite charity, you can simply log in to your account and recommend a grant to any IRS-qualified public charity.
As soon as you make a charitable contribution, you are eligible for an immediate tax deduction, just as you would be by donating to another public charity, like your local homeless shelter or food pantry. But some donations could make you eligible for additional benefits.
Cash donationsIf you donate cash, via check or wire transfer, you're generally eligible for an income tax deduction of up to 60% of your adjusted gross income.
Donations of long-term appreciated assetsDonating long-term appreciated securities directly to charity—instead of liquidating the asset and donating the proceeds—can help maximize both your tax benefit and the overall amount you have to grant to charity. These donations provide two tax benefits:
Private foundations and donor-advised funds are both charitable giving vehicles that help donors facilitate their giving and achieve their philanthropic goals. Unlike donor-advised funds, private foundations are separate legal entities, generally established by an individual, family, or corporation. Private foundations are subject to more stringent tax laws and regulations than public charities and are responsible for their own tax filing and recordkeeping. Benefits of a private foundation include greater administrative control over assets and grantmaking, including the ability to make grants to organizations other than IRS-qualified, 501(c)(3) public charities. With different structures, rules, and features, donor-advised funds and private foundations each come with a unique set of advantages and limitations. Learn more about private foundations.
You can incorporate your donor-advised fund into estate planning by making a bequest in your will to the DAF sponsor or by making the sponsor a beneficiary of a retirement plan, life insurance policy, or charitable trust. By leaving instructions with the DAF sponsor, you can support multiple charities with one bequest. These gifts can also help reduce or eliminate the estate tax burden for your heirs.
Many sponsoring organizations also enable you to create a succession plan for your donor-advised fund—allowing you to pass the remaining funds in your account on to your heirs or your favorite charities. Some programs allow you to break the fund up into multiple smaller funds to pass down to different successors. While sponsoring organizations handle succession differently, donor-advised funds can be a valuable tool for estate planning.
You’ve worked hard to establish your charitable legacy. Make sure to pass it on by nominating an individual, a charity, or a combination of both as the successor for your Giving Account. Nominating a successor(s) is the simplest way to continue the legacy of your Giving Account after your passing. You can establish a succession plan when you open a Giving Account, or you can nominate a successor(s) at any point by logging in to your Giving Account, clicking "Your profile," and choosing the "Successor" tab.
If a successor is not recommended, then upon your death, any remaining balance will be granted out in accordance with the Fidelity Charitable Trustees’ Initiative. For more information regarding successor options, review the Fidelity Charitable Giving Account Guide.
Naming your donor-advised fund
Though a donor-advised fund is not a foundation or a trust, many donors choose to grant from their Giving Account as they would from a family or private foundation. Because of this, some elect to use this language in naming their donor-advised fund.
Examples: The Frank Smith Giving Foundation, The Francis Williams Missions Trust
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The Amicos turned to their local child welfare organization, Embrace Families—where Peter also volunteers as a board member—to discuss how they could help improve the lives of older kids in the foster care system. They used a Fidelity Charitable donor-advised fund to help launch a program to support foster families with kids age 11 and older. That program, TeenEmbrace, has already seen remarkable impact: In its first year, data shows a 94% average placement stability rate among the 170 teens participating in the program.
Join more than 300,000 donors who choose Fidelity Charitable to make their giving simple and more effective.
Since 1991, we have been a leader in charitable planning and giving solutions, helping donors like you support their favorite charities in smart ways.
The growth potential of donor contributions is even more impressive. Thanks to Fidelity Charitable investment programs, an additional $15 billion has been made available for charitable giving. That's a distinction matched by few organizations in the U.S.
From world-class service to expertise in handling donations of non-publicly traded assets, we have your charitable needs covered.
Our service team is always happy to answer questions and connect you to resources that can help you achieve your charitable giving goals. You can also tap into our team of lawyers and experts for guidance on how to donate seemingly illiquid assets like private company stock, restricted stock, real estate, and more.
With a Giving Account, bookkeeping has never been easier. You can view your Giving Account history and statements online at any time. You can even keep track of donations you've made outside of Fidelity Charitable, so all your giving is organized in one place.
Plus, our mobile capability makes sure you're always connected to the causes you care about. It even lets you recommend grants to charities on the go. It's all part of our approach to simple, more effective giving.
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