Donor Advised Funds
Donor Advised Funds
A Donor Advised Fund (DAF) is a charitable giving vehicle sponsored by a public charity that allows donors to make a tax-deductible contribution of cash or appreciated assets. The funds are invested and grow tax-free, and the donor can recommend grants to any qualified charitable organization (like Hidaya Foundation) over time.
If you have a DAF account at any of the financial institutions, you may use DAFpay or DAF Direct to make a real-time Donor Advised Fund grant to Hidaya Foundation.
Here are some of the advantages when you donate through a DAF entity.
Immediate Tax Deduction: When you contribute to a DAF, you can claim an immediate tax deduction for the full fair market value of your donation in the year you make the contribution. This can be especially beneficial if you donate appreciated assets, as you can avoid paying capital gains tax on the appreciation.
Tax-Free Growth: The funds in your DAF are invested and grow tax-free. This means you can maximize the impact of your donation over time.
Flexibility in Grantmaking: You have the flexibility to recommend grants to your favorite charities over time, allowing you to strategically plan your giving.
Simplified Tax Filing: By bundling your charitable giving into a DAF, you can simplify your tax filing process and potentially reduce your tax burden.
While DAFs offer significant tax advantages, they are not a one-size-fits-all solution. You must consult with a tax advisor to determine if a DAF is right for your specific financial situation and charitable goals.
Several financial institutions offer DAF accounts. Here are a few options, each with some differences in fees, minimum contributions, minimum balances needed, etc. Click on the links below to find out more about their fees and benefits.