A Donor Advised Fund is like a charitable savings account. Here's how it works. You transfer cash or other assets to a tax-exempt sponsoring organization, such as the Vermont Community Foundation, or a private company, like Fidelity Charitable or Schwab Charitable. Whenever you want, you can recommend—but not direct—how much and how often money is granted to MAHHC or other charities. You qualify for a federal income tax charitable deduction at the time you contribute, and centralize your giving and record-keeping.
A few other details:
- Most donor advised funds require a minimum gift to open your fund, although additional contributions may require less.
- You can make additional contributions to your fund at any time. Your contributions are invested by the sponsoring organization, which provides a regular accounting to you.
- You can name a loved one as your successor to continue to recommend grants to charitable organizations, or you can name MAHHC as a beneficiary to receive all or part of the account after your lifetime.
Tips for Choosing Where to Set Up Your Fund
- Evaluate the sponsoring organization carefully—When you make a gift to a Donor Advised Fund you irrevocably give away your money or property. Make sure the organization you select is one that supports your values.
- Understand the fund's policies and procedures—Minimum contributions, as well as the amount and frequency of grant recommendations, all vary depending upon the sponsoring organization.
- Consider costs and investment—All Donor Advised Funds charge administrative fees that can vary considerably. In addition, investment performance will vary from one Donor Advised Fund to the next, affecting the amount that will actually be distributable to charitable organizations.
As with any investment choice, seek the advice of your financial or legal advisor.