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December 11, 2024 - This Christmas you can give a gift that keeps on giving by making a contribution to a donor-advised fund.

A donor-advised fund (DAF) is a charitable giving account that is sponsored by a public charity, like HighGround Advisors, and funded by a donor’s tax-deductible contributions of cash, stock, or other assets. Contributions to a DAF have the potential to grow, tax-free, over time and donors retain the right to recommend grants from the DAF to eligible charities of their choice.

How does a DAF help your gift keep giving? With a DAF, donors can do these three things:

1. Multiply the Gift

DAF sponsors, like HighGround, typically offer professionally managed investment funds in which donors can invest their DAF contributions for tax-free growth according to their giving time horizon and charitable goals. Smart investment management can multiply the dollars in a DAF. In one real-world example, a donor opened a DAF at HighGround, and the investment growth over a 20-year span nearly doubled his charitable impact. He put $680,000 into the DAF during that period and granted out $700,000 in that same time. Though his DAF balance after two decades should have been in the red, instead, he had $520,000 left for future grants. With a DAF and HighGround’s investment management expertise, donors can multiply the dollars available to grant to charity.

2. Multiply the Givers

A DAF is an excellent charitable tool for those who wish to encourage others in the joy of giving. Donors who seek to foster generosity as a value and practice in their family can name their adult children or young adult grandchildren as fellow Donor Advisors or as Additional Users with specific DAF privileges. By doing so, families enjoy meaningful conversations to determine together when and to which organizations grant recommendations should be made from the DAF. Many donors find that members of the next generation become champions of beloved causes, learning to recognize and prioritize the needs of others. When used intentionally in this way, a DAF can help multiply compassionate givers.

3. Give the Gift of Giving

DAF donors can decide how the funds within their DAFs will be granted to charity upon their passing. In many cases, donors name trusted individuals to assume the responsibility of recommending grants. These named individuals, DAF Successor Advisors, receive the profound gift of choosing which charities will benefit from someone else’s contributions. By selecting this succession strategy for their DAF, donors leave a legacy of generosity by empowering their loved ones to give. Often, this gift of giving sparks a passion for philanthropy in the Successor Advisor, and they begin to make their own contributions to the inherited DAF, ensuring charities will benefit well into the future.

If you would like to open a donor-advised or learn more about how to maximize your DAF, call our Director of Philanthropic Engagement & Strategy at 214-978-3303.