What Is a Donor Advised Fund and How Does It Work?
A donor advised fund gives you an immediate tax deduction now and the freedom to choose charities later. We build plans meant to last.
By Kenneth J. Simmons, Jr., Partner, Simmons & Schiavo, LLP | Last updated: September 10, 2026
What Is a Donor Advised Fund?
A donor advised fund, or DAF, is an account you open through a sponsoring public charity. You contribute cash or other assets, get the tax benefit right away, and recommend grants to specific charities whenever you are ready.
The sponsoring organization legally controls the fund and makes the final grant decisions, though it generally follows the donor’s recommendations.
How Does the Tax Deduction Work?
Because a DAF sponsor is a public charity, your contribution is deductible the year you make it, not the year the money eventually reaches a charity. Cash contributions are generally deductible up to 60% of your adjusted gross income, and gifts of appreciated stock or other long-term property up to 30%.
If your gift is larger than those limits allow you to deduct in one year, the unused portion can generally be carried forward for up to five years.
What Can You Contribute, and When Do You Have to Choose a Charity?
You can fund a DAF with cash, appreciated securities, or other assets, either all at once or over time. You do not have to name your charities up front. Many people use the fund to smooth out a large gift, such as a bonus or the sale of a business, into grants recommended over several years.
Common ways to fund a donor advised fund include:
- Cash or a check
- Publicly traded stock that has grown in value
- Mutual fund shares
- Proceeds from the sale of a business or real estate
How Does a Donor Advised Fund Compare to a Charitable Trust?
The right vehicle depends on what you want back, if anything, while you are still giving.
- A donor advised fund is simpler and less expensive to set up, with no ongoing trust administration
- A charitable remainder or charitable lead trust can pay income back to you or your family before the remainder goes to charity
- A trust or family foundation can keep a giving structure running under your family’s direction for generations
How We Help You Build a Charitable Giving Plan
Charitable giving tends to work well as part of your overall estate plan, not as a separate decision. We look at your full picture, including any special needs trust, retirement accounts, or business interests, so your charitable goals and your family’s needs work together instead of competing.
Our Woburn charitable planning attorneys can help you decide whether a donor advised fund, a charitable trust, or a combination makes the most sense for your situation.
Talk to a Massachusetts Charitable Planning Attorney
If you are considering a donor advised fund or another way to build a charitable legacy, contact Simmons & Schiavo, LLP at (781) 675-1315 to schedule a consultation.
