Both Donor-Advised Funds (DAFs) and Community Foundations allow donors to make a lasting impact through charitable giving, but they serve different purposes and offer distinct advantages.
Donor-Advised Fund (DAF)
- A DAF is like a personal charitable giving account, typically managed by a financial institution, nonprofit, or another sponsoring organization.
- Donors contribute funds, receive an immediate tax deduction, and then recommend grants to charities over time.
- Funds in a DAF can be invested and grow tax-free, allowing donors to give strategically.
- DAFs are flexible, with no requirement to distribute funds within a certain timeframe.
- They do not provide direct community support or personalized grantmaking assistance.
Community Foundation
- A Community Foundation is a public charity focused on supporting a specific geographic area or cause.
- Donors can set up funds within the foundation or contribute to existing initiatives.
- Unlike DAFs, community foundations actively manage grantmaking, using deep local knowledge to address pressing needs.
- They offer personalized guidance on impactful giving, connecting donors with causes that align with their values.
- Community foundations also manage endowments, ensuring long-term community support.
Which is Right for You?
- If you want maximum flexibility, investment growth, and full control over when and where you give, a DAF might be the best option.
- If you want hands-on support, expert guidance on local needs, and the assurance that your philanthropy will support long-term community impact, a Community Foundation may be the better choice.
Many donors use both—a DAF for national or global giving and a community foundation fund to support local causes.
We would love to discuss how you can maximize your impact based on your philanthropic goals!
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