How a Donor-Advised Fund Works

With decades of experience performing tax services and estate planning, Rich Kruithoff began his role as president of Charitable Planning Services in 2016. Rich Kruithoff creates donor-advised funds (DAFs) tailored to each client’s desires to expedite individuals’ ability to donate to their chosen charities.

A DAF is an account type dedicated to storing and growing eventual donations to the donor’s chosen organizations. A DAF sponsor controls the account and performs responsibilities by checking the legitimacy of the donor’s charities and making the donor’s selected grants. A donor can even utilize estate planning services to designate control of the DAF after their death.

A DAF benefits the donor by allowing them to receive tax deductions the year they deposit money into the DAF, not the year they donate to a certain charity. A donor can receive a larger tax deduction than smaller and repeated donations over successive years by depositing large sums of money at once. The donor can allow the account to grow at the sponsoring organization’s chosen interest rate as long as they like, though the sponsor may require periodic grants.