What is a donor-advised fund?

A donor-advised fund 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 virtually any IRS-qualified public charity.

When you give, you want your charitable donations to be as effective as possible. 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 donor-advised fund works.

Make a tax-deductible donation

Donate cash, stocks or non-publicly traded assets such as real estate, private business interests and private company stock and get your tax receipt. You’ll also be eligible for an immediate tax deduction. See what you can donate.

Grow your donation, tax-free

While you're deciding which charities to support, your donation can potentially grow based on your investment preferences, making available even more money for charities. Investment options.

Support charities you love, now or over time

You can support virtually any IRS-qualified public charity with money in the donor-advised fund. The public charity sponsoring your account will conduct due diligence to ensure the funds granted out will be used for charitable purposes and the grantee is an IRS-qualified public charity. Charities you can support.

A wide range of acceptable assets

Contributing assets other than cash is simple with a donor-advised fund; other types of charities may not be able to accept non-cash donations. See what you can donate

Assets generally accepted include

Tax benefits

As soon as you make a donation, you are eligible for an immediate tax deduction, just as you would by donating to another public charity. Your tax deduction may depend on the type of donation.

• Cash donation - If 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.
• Long-term appreciated assets - Donating long-term appreciated securities potentially allows you to maximize capital gains tax advantages, which could help you reduce taxes and ultimately give more to charity. If you have long-term appreciated assets, such as stocks, bonds or real estate, you have an opportunity to further maximize your deduction. By donating these types of assets directly to charity, you generally won't have to pay capital gains, and you can take an income tax deduction in the amount of the full fair-market value, up to 30% of your adjusted gross income (AGI).

Other advantages of a donor-advised fund

Continue to enjoy benefits beyond the basics.

• Simplified recordkeeping - it's much easier to keep track of one tax receipt
• Support your legacy planning
• Authorize your financial advisor to help you take full advantage of your donor-advised fund
• Name your donor-advised account, such as the Robinson Family Fund