So now that you know more about what a DAF is, why use it? What’s the benefit?
DAFs offer a variety of unique features that make giving to a cause feel more impactful, both for the donor and for the receiving organization. For example, there are the tax benefits. When you, the donor, make a deposit—regardless of the amount—you are eligible for an immediate tax deduction benefit.
DAFs also provide simple, straightforward recordkeeping and data organization. This is great for both the donor and the nonprofit. If you’re sick of trying to track down donation receipts when it’s tax season, DAFs are a great option as they provide all donation receipts (for those gifts donated through the fund) in one convenient place. Plus, most DAF providers keep comprehensive records of all transactions that occur, which gives you the opportunity to track how your giving evolves over time.
Tax-free growth is another huge benefit of DAFs. Once you put money into your account, you have the potential to grow your balance by investing those dollars. While some DAF sponsors keep investment opportunities more generic, others like EarthShare provide a number of vetted investment options, ensuring what you choose is aligned with your personal values. You can have a positive impact with your charitable funds even before granting them out to nonprofits.
Do you hate the annual year-end decision making crunch? DAFs can help you avoid that by giving you the time you need to create thoughtful giving strategies throughout the year. Whether you let money accumulate for a while or you need a couple of extra months, DAFs offer you flexibility even after you have your tax receipt, which is a huge plus.