Donor Advised Funds and Family Foundations

How it Works

You decide you want to give periodically to more than one charity and/or you decide you want to involve some family members in the decision-making process.

In a Donor Advised Fund you make an irrevocable gift of at least $5,000 to a managing agency. They in turn invest the funds and keep the records. From time to time you request of them a payment to a charity or charities of your choosing. They honor your recommendation. After setting up the fund you may add to it, change your charity recommendations, grant to others the right to make recommendations, and make provisions for its continuation after death, if you so desire.

Among the agencies which offer donor advised funds are universities, hospitals, Community Foundation of Middle Tennessee, Fidelity Advisors, T. Rowe Price, and Vanguard. They provide tax, investment, and accounting services on their funds. Each has its own regulations and costs, which you should carefully investigate and understand. (Those named here are for information, not an endorsement.)

A Family Foundation is similar but on a larger scale. While you adhere to laws and regulations , you maintain control You have more flexibility and can work with trust institutions. The institutions can provide you the investment services, tax accounting, and legal protection.

 Both methods provide tax advantages for charitable deductions in the year you make contributions to the fund or foundation.

What to Do

Decide if this form of charitable giving is appropriate for you. If so, investigate several institutions concerning their benefits and rules of operation, using your own legal and financial advisors. Set it up and then enjoy its ease and flexibility.