What is a Donor Advised Fund?

A donor establishes a donor advised fund (DAF) with a qualified 501(c)(3) nonprofit DAF sponsor like The Signatry and makes tax-deductible donations into the fund.

The sponsor has legal control over the fund and gives the donor advisory privileges to recommend how those dollars are granted to other nonprofit organizations. Donors can also recommend investments within the donor advised fund in order to grow the fund balance over time.

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How Do Donor Advised Funds Work?

1. Choose a fund sponsor.

A donor advised fund is a partnership between the donor and the sponsor. As a donor, you make an irrevocable donation to the sponsor; the sponsor will hold your contributions and vet the nonprofits you recommend supporting.

Because the donor and the sponsor both play a part in choosing nonprofits to support, it is important to choose a fund sponsor that aligns with your values.

2. Open an account to establish a relationship with the sponsor.

Most donor advised fund sponsors will allow you to set up a fund online. Create an account on the sponsor’s website and follow their instructions to create a new donor advised fund.

3. Make your contribution.

After you open a donor advised fund, you can make a charitable contribution to the fund. Contributions are generally tax deductible for the year in which they are made.

4. Maximize generosity and support your favorite causes.

Now you can recommend how the sponsor will steward your contributions:

  • Recommend a grant to a nonprofit organization. You can typically do this online. The sponsor will vet the nonprofit and complete the donation with the fund balance.
  • Recommend investing part or all of the fund balance to grow and enable greater generosity later. Some fund sponsors, including The Signatry, even offer values-based investment options.

Donor advised funds are flexible giving tools that your family can use to accomplish a variety of generosity goals.

Benefits of a Donor Advised Fund

Giving generously is part of a life of faithful stewardship. A donor advised fund is not meant to be an alternative to your current giving rhythms, but a complement. How can this giving tool help you expand on what you are already doing?

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Charitable Tax Deductions:

Receive a tax deduction for the year you make your charitable contribution.

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Bunch Itemized Deductions:

Strategically timing your charitable tax deductions may help you maximize your giving in the long term. Learn more about charitable bunching.

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Give Together

You can add multiple users to a donor advised fund online. Create a collaborative giving pool with family members or friends to plan your giving together.

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Grow Your Charitable Contributions Tax Free:

Investments in a donor advised fund can grow tax free, enabling your contributions to grow and make an even greater impact.

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Simplify Your Tax Receipts

Rather than donating separately to different nonprofits and receiving tax receipts from each, you can simplify by giving through The Signatry – receiving one tax receipt – then recommending grants to different nonprofits.

The Signatry sponsors donor advised funds that can help you minimize your taxes and maximize your generosity to the causes you care about most. Our funds are designed for the whole family to use as you practice the habits of stewardship and generosity together.

Donor Advised Funds with The Signatry

Be Generous with All Your Resources, including Noncash Assets

Most Americans hold the bulk of their wealth in noncash assets, not in cash. If you are planning to sell an asset—like real estate or a family business—you may be able to give much more than you thought by donating the asset to a donor advised fund before it sells.

Learn More about Noncash Asset Donations

Noncash Giving

Donor Advised Fund Rules & FAQs

When will I be able to claim my charitable tax deduction?

If you claim a charitable tax deduction for your contribution to a donor advised fund, the deduction will apply to the tax year that you made the contribution.

For example, if you make a charitable contribution to a DAF in December 2024, your charitable tax deduction will apply to the 2024 tax year. This is true even if your first grant recommendation occurs in 2025.

Who has legal ownership of the funds in a donor advised fund?

As soon as you make a contribution to a donor advised fund, the sponsor organization gains ownership of the contribution. Sponsors invite grant recommendations from donors, but every sponsor reserves the right to deny the grant recommendation if the recipient does not align with the established granting policy.

What organizations can I recommend grants to?

Donor advised fund sponsors may send grants to nonprofit organizations that are in good standing with the IRS and comply with the sponsor’s granting policy. A donor advised fund may not send grants to individuals or to organizations that are not recognized by the IRS as a nonprofit.

How much does a donor advised fund cost?

Fund sponsors typically assess small fees for services like maintaining a donor advised fund, investing funds, and processing grant recommendations and payments. Some sponsors require a minimum contribution to start the fund.

The Signatry’s donor advised funds do not cost anything to set up, and we do not charge an administrative fee on the balance of the fund. See a full explanation of our fees and requirements.

How does a contribution become a grant?

Watch the video below to follow the journey of a dollar from contribution to grant at The Signatry.


Why Set Up a Donor Advised Fund with The Signatry?

Discover the benefits of a faith-based Donor Advised Fund!

Learn More

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