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Donor Advised Funds (DAFs)

Trading Term

DAFs are charitable giving vehicles that allow donors to make an irrevocable charitable contribution in a specific tax year to realize an immediate tax benefit and then recommend charitable grants from the fund over time.  Donors can contribute to the fund as often as they like, placing funds into a donor-advised fund account where it can be invested and grow tax-free. There are many specialized DAFs that offer impact investment options to donors as an alternative to mainstream investments. In this way donors can magnify the social impact of their DAFs by investing them in social impact ventures until they decide how to donate the money to charity. Since DAF assets have already crossed the philanthropic boundary, they will never go back to the donor, which means DAF capital can afford to be more risk-taking, and thus catalyze other more commercial investors into impact ventures.

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