In my first article for the Newsletter, I presented an overview of Gaston Community Foundation’s (GCF) services, using the idea of a “charitable bank” as a comparison, and promised in future writing I would take a “deeper dive” into individual aspects of our operations. The last Newsletter looked at the first of four types of funds that GCF holds: “Special Agency Funds” (SAF). This issue will focus on Donor Advised Funds (DAF), another type of fund with a different charitable purpose. 

If we continue with the idea of comparing GCF to a charitable bank, then donor advised funds can be thought of as “charitable checking accounts” with several important differences. DAF holders donate funds to GCF. And they receive an official gift receipt for the full amount donated to be used as a tax deduction. But–and here is the catch—the funds that a DAF holder donates go into a separate fund, and only the DAF holder can direct where grants from the fund are to be given to a certified nonprofit or governmental agency. So, while DAF holders do not own their fund, they alone advise where grants from their fund are directed. DAF holders can spend as much or as little of their funds as they want. They simply contact GCF through our portal or by email and tell us where they want to direct a grant. Whatever amount remains in the DAF is invested along with other GCF funds and grows at the same rate. Over the last five years, that rate of growth has been around 8% annually.

Many donors prefer to use donor advised funds rather than make direct contributions to many nonprofits because it simplifies record keeping for tax deduction purposes. Instead of having to keep track of lots of individual gift receipts from many nonprofits, a DAF holder just keeps GCF gift receipt from their donation to a fund.

DAFs also allow for flexibility in scheduling when gifts are given. Donors can make a grant to a nonprofit whenever they want, knowing that their funds are well invested and growing. Because of IRS pressure, donors are encouraged to at least make a few grants from their DAFs each year. DAF grants can be made to any nonprofit or governmental agency in the United States. They are not limited to Gaston County. At present, the GCF has over 200 donor advised funds with total assets of $49 million. Donor advised funds begin with a minimum balance of $15,000. Several of our largest DAFs are close to a million dollars. 

If you are interested in knowing more about donor advised funds or think you might benefit from starting one, talking to your accountant or personal financial advisor is a good idea. Executive Vice President Elizabeth Patton and I are also eager to discuss DAFs with anyone who wants to know more. DAF advantages are substantial, and many DAF holders celebrate how simple and easy they make charitable giving. DAFs are one of the most important tools that GCF uses to promote philanthropy in our local communities and across the country. 

Richard Rankin

President