A donor-advised fund, or DAF, is a giving vehicle established at a public charity. It allows donors to make charitable contributions of cash, securities, or other illiquid assets and receive an immediate tax deduction. The contributed funds can be invested for tax-free growth and donors may recommend grants from the funds over time. Donors can contribute to the fund at any time, and recommend grants to their selected IRS-qualified public charities whenever they chose. DAFs are particularly attractive to donors with long-term appreciated securities because donating these assets may allow the donor to eliminate (or minimize) capital gains taxes, thereby reducing the donor’s overall tax liability and leaving more funds available for charitable causes.
Fleming Petenko’s lawyers assist both organizations that have DAFs and donors wishing to contribute to a DAF with the following:
- Conducting a due diligence review of illiquid assets to be contributed
- Preparing appropriate grant agreements
- Structuring and drafting transfer agreements
- Advising on strategic tax planning issues