What Is a Donor-Advised Fund?

A donor-advised fund (DAF) is a charitable account that lets you make an immediate tax-deductible contribution and then recommend grants to charities at any time in the future — even years later. You contribute cash, securities, or other assets to the fund, claim the charitable deduction in the year of contribution, and the fund invests and manages the assets until you direct grants to qualifying nonprofits. One of the biggest tax advantages is the ability to donate appreciated stock: you avoid capital gains tax on the appreciation and still deduct the full fair market value of the shares. DAFs are also ideal for bunching charitable deductions — contributing several years' worth of giving in one year to exceed the standard deduction threshold, then spreading grants to charities over multiple years. Fidelity, Schwab, Vanguard, and many community foundations offer DAFs with no minimum grant amounts and low administrative fees.