Personal Resource Center

What is a Donor Advised Fund?

Open hands and dollar sign icon
If you're looking for a method to give to the charities nearest to your heart while maximizing your tax deductions, consider a donor advised fund.

If you're looking to donate to local or regional organizations with a specific mission (like fighting hunger), you may want to set up a DAF with a community-based foundation that focuses on that goal. Community-based foundations usually know the organizations that best meet your charitable goals and specialize in managing DAFs for that community or mission. You'll pay a modest DAF management fee for as long as there are funds in the account.

An individual nonprofit or institution. You also can establish the DAF directly with the organization you want to benefit, like a nonprofit or educational institution. Setting up a DAF directly with the organization you want to fund typically means your money will be put to use the fastest. But you need to be sure that the organization is qualified to manage your DAF.

For managing your DAF, the organization gets administrative fees, and those fees can vary by organization.9 Those fees benefit the nonprofit, which may use them to make charitable donations. It makes sense to ask not only what the administrative fees are, but where they go and whether they reduce the funds in your DAF.

National foundations and financial institutions. National foundations (like the Donor's Trust) or financial institutions (like an investment firm) allow you to open DAFs with them, too.10 They have more resources and staff to help you manage your DAF, but they come with higher account minimums and management fees. They are also better equipped to help you make grants to national or international causes, though.

Single-issue charities. These are exactly what they sound like, charities that support single issue initiatives or campaigns with the funds in DAFs and other donations. Be careful to ask questions about these charities to ensure they support organizations that thoroughly share your values.

What happens once I add my contributions to a donor advised fund?

When you make a contribution to a DAF, you get an immediate tax deduction — even if your contributions don't all go to a nonprofit directly during that tax year. And the funds invested in a DAF grows tax free.

After you make your first donation, the organization where you opened your DAF gets control over the account. They'll look to you to advise them on where you want to make donations, but they can decline to donate the funds to the organization of your choice.

That's why it's essential to understand the policies of the organization before you choose them to manage your DAF — especially since the donations to you DAF are irrevocable.

Thinking about setting up a DAF? Talk with a Synovus financial advisor to better understand the implications of donations on your finances — and to see if a DAF could be right for you.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Council on Foundations, "Donor Advised Funds," accessed August 1, 2022. Back
  2. Lawson Bader, "Charitable Trade-offs Between Donor-Advised Fundsand Private Foundations," Kiplinger, March 22, 2022, accessed August 1, 2022. Back
  3. Donor's Trust, "Donor-Advised Funds," accessed August 1, 2022. Back
  4. American Endowment Foundation, "Reduce Capital Gains Tax andOther Tax Benefits," accessed August 11, 2022. Back
  5. https://cfgreateratlanta.org/, accessed September 2, 2022. Back
  6. The Grantsmanship Center, "The Community Foundation of GreaterAtlanta," accessed September 2, 2022. Back
  7. https://cftampabay.org/, accessed September 2, 2022. Back
  8. The Grantsmanship Center, "Community Foundations: FL," accessed September 2, 2022. Back
  9. Atlanta Beltline, "Help Move the Atlanta Beltline Vision Forward," n.d., accessed September 2, 2022. Back
  10. https://www.donorstrust.org/, accessed September 2, 2022. Back