Family Office Bulletin: Insights Into Donor-Advised Funds

Insights Into Donor-Advised Funds

Donor-advised funds are third-party charitable funds set up by a sponsoring organization that accept contributions from donors and then facilitate those contributions to various charities at the direction of the donor. Contributions can be made in the form of cash, securities, or even complex assets such as real property or a piece of artwork. These contributions are treated as gifts by the donor to 501(c)(3) public charities. The largest, nationally recognized sponsoring organizations for these funds include Fidelity Charitable Gift Fund, Schwab Charitable Services, Vanguard Charitable, and National Philanthropic Trust. Many high net worth individuals and families who are heavily involved in charitable giving, including many of our clients here at Chilton Trust, can utilize these vehicles as an option to their current form of charitable gifting. We are often asked the question, why choose a donor-advised fund as a vehicle for charitable giving as opposed to direct giving? Why not open a private family foundation and process donations from there? The answers ultimately depend on the client’s specific needs and/or circumstances, and the outline below will help provide further information on these donor-advised funds.

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