donor-advised funds
Give Now, Decide Later: Support DAP Health With Donor-Advised Funds
Donor-Advised Funds (DAFs) are a popular and effective way to support charitable causes while maximizing tax benefits.
With a DAF, donors contribute to a dedicated account, receive an immediate tax deduction, and recommend grants to nonprofits like DAP Health over time. This flexible approach empowers thoughtful, strategic giving — though disbursements may be delayed. Understanding how DAFs work can help donors align their philanthropy with long-term impact.
How donor-advised funds work
- Donor Contribution – The donor contributes money, stocks, or other assets to a DAF, which is typically managed by a sponsoring organization (such as a community foundation or a financial institution’s charitable arm, such as Fidelity Charitable or Schwab Charitable).
- Immediate Tax Deduction – The donor receives an immediate tax deduction in the year the contribution is made, even if they don’t distribute the funds to a charity right away.
- Investment Growth – The contributed funds can be invested, potentially growing tax-free over time.
- Grant Recommendations – The donor can recommend grants to IRS-qualified charities at any time.
Impact on the donor
- Immediate Tax Benefit – The donor can deduct the full amount of their contribution (subject to IRS limits), even if the funds are not immediately distributed.
- Tax-Free Growth – Any investment gains within the DAF are not subject to capital gains taxes.
- Flexibility in Giving – Donors can take their time in selecting which charities to support while still benefiting from a tax deduction upfront.
- Anonymity (Optional) – Donors can choose to remain anonymous when making grants.
Impact on the nonprofit
- Delayed But Potentially Larger Donations – Nonprofits may receive grants from a DAF over time rather than immediately after a donor receives a tax benefit.
- Unpredictable Payout Timing – Unlike direct donations, which nonprofits can immediately count on, grants from DAFs come at the donor’s discretion.
- Larger Giving Pool – Some nonprofits benefit from receiving larger, strategic grants as a result of the investment growth within DAFs.
- Potential Funding Gaps – If donors take a long time to disburse their funds, nonprofits may experience delays in receiving much-needed resources.
Learn more about DAFs
To learn more about donor-advised funds, please contact DAP Health’s Director of Individual Giving and Donor Relations Matt Swearman.