A Donor-Advised Fund can make charitable giving more strategic and streamlined. This guide explains what a DAF is, how it works, and the benefits it can offer—from simplifying recordkeeping to giving with appreciated assets and separating your tax deduction from when you recommend a charitable grant. Discover how to establish a DAF, make the most of your charitable dollars, and recommend a grant to Child Crisis Arizona.
If you've ever wished charitable giving could be a little simpler, a little more strategic, and a little more tax-savvy, there's a good chance a Donor-Advised Fund (DAF) is exactly what you've been looking for. It's one of the fastest-growing forms of charitable giving in the country, and for good reason: it's flexible, it's efficient, and it puts you in the driver's seat of your own generosity.
Here at Child Crisis Arizona, we're often asked by supporters, "What exactly is a DAF, and why would I use one instead of just writing a check?" So let's break it down.
What Is a Donor-Advised Fund?
Think of a Donor-Advised Fund as a charitable savings account. You contribute cash, stock, or other assets into the fund, you receive an immediate tax deduction for that contribution, and then, on your own timeline, you recommend grants from the fund to the causes and organizations you care about, like Child Crisis Arizona.
The money is no longer yours in a legal sense, it belongs to the sponsoring organization that manages the fund (often a community foundation or a financial institution like Fidelity Charitable, Schwab Charitable, or Vanguard Charitable). But you retain "advisory privileges," meaning you get to recommend where and when the money goes.
In short: you give once, get your deduction once, and then take your time deciding how to distribute the impact.
Why Donors Love Giving This Way
1. You separate the tax event from the giving decision. One of the biggest advantages of a DAF is that your tax deduction happens the moment you contribute to the fund, not when you eventually recommend a grant. That means if you have a high-income year and want to maximize your deduction now, you can contribute a larger amount to your DAF today and decide later, over months or even years, which organizations to support.
2. It's an efficient way to give appreciated assets. Many donors use their DAF to contribute appreciated stock, mutual funds, or other securities instead of cash. When you donate appreciated assets directly to a DAF (rather than selling them first), you generally avoid paying capital gains tax on the appreciation, and you can still deduct the full fair market value of the asset. That's a meaningful benefit for donors who've held investments for a long time and want to give in a tax-efficient way.
3. It simplifies your giving and your recordkeeping. Instead of tracking receipts from a dozen different nonprofits throughout the year, your DAF sponsor handles all of that for you. You get one tax receipt for your contribution to the fund, and then you can recommend grants to as many organizations as you'd like without needing separate paperwork for each one.
4. It lets you be strategic and intentional. Because the money is already set aside for charitable purposes, a DAF gives you room to think, research, and decide thoughtfully about where your generosity will have the greatest impact, rather than making rushed, end-of-year giving decisions.
5. It can grow tax-free while you decide. Most DAF sponsors allow the funds in your account to be invested, meaning your charitable dollars have the potential to grow tax-free until you're ready to grant them out. That means your gift to Child Crisis Arizona, or any other cause you care about, could be even larger by the time you recommend it.
How to Set Up a Donor-Advised Fund
Setting up a DAF is simpler than most people expect. Here's a general overview of the process:
Already Have a DAF? Consider Child Crisis Arizona for Your Next Grant
If you already have a Donor-Advised Fund, recommending a grant to Child Crisis Arizona takes just a few minutes through your DAF provider's website or app. Your grant helps provide emergency shelter, foster care, adoption services, early education, and family support to children and families across Arizona, exactly when they need it most.
A Quick Note
Every donor's financial and tax situation is different, and the specific rules around deduction limits, asset types, and DAF sponsor requirements can vary. We'd always encourage you to talk with your financial advisor or tax professional to understand what makes the most sense for your personal giving strategy. We're not tax or financial advisors ourselves, but we're always happy to answer questions about how a DAF grant to Child Crisis Arizona works on our end.
If you have a DAF and are considering Child Crisis Arizona for your next grant recommendation, or if you'd like to talk through your giving options, we'd love to hear from you.
Karen DeCarlo, Director of Individual & Legacy Giving • 602-926-9158 • karen.decarlo@childcrisisaz.org
