What is a donor-advised fund and should I use one?
Answer: A donor-advised fund is a charitable account administered by a sponsoring charity. You make an irrevocable contribution, potentially receive a charitable deduction, and recommend investments and grants over time; the sponsor retains legal control. Consider one to organize ongoing giving or contribute appreciated assets, while weighing fees, deduction limits, and the permanent commitment to charity.
By Edward Papier, CIMA, CF2, CM&AA ยท Last updated November 5, 2026
What is the difference between a donor-advised fund and a charitable remainder trust?
A donor-advised fund is a simple account for giving: you get a deduction now and recommend grants to charities over time, but you receive no income from it. A charitable remainder trust pays you an income for life or a set term first, and only what remains goes to charity. CRTs cost more to set up but can help with selling appreciated assets.
Donor-advised fund vs charitable remainder trust
Donor-advised fund | Charitable remainder trust | |
|---|---|---|
Pays income to you | No | Yes |
Tax deduction | Full, when funded | Partial, when funded |
Can be undone | No | No |
Best for | Simple giving over time | Selling a highly appreciated asset and keeping an income |
Can I give appreciated stock to a donor-advised fund?
Yes, and it is often the most tax-efficient way to give. If you have held the stock more than a year, you can generally deduct its full market value and avoid capital gains tax on the appreciation. Many funds also accept private company stock, real estate and other complex assets, though the rules and valuations are more involved.
What is the difference between a donor-advised fund and a private foundation?
A private foundation gives your family full control over grants and investments and can employ family members, but it must distribute about 5% of its assets each year, pay an excise tax and file public tax returns. A donor-advised fund is cheaper and simpler, offers higher deduction limits and more privacy, but the sponsor has final legal control.
Talk to us
To talk through your own situation, please call 212-697-3930, email ep@amadeuswealth.com, or schedule a meeting at calendly.com/ep-awa.
Edward Papier, CIMA, CF2, CM&AA
President, Amadeus Wealth Alternatives, Hackensack, NJ
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