Donor Advised Funds

A donor advised fund is a charitable giving vehicle wherein an individual, family or corporation makes an irrevocable, tax-deductible contribution of personal assets to a charity and at any time thereafter can recommend grant distributions to qualified public charities. This may sound just like a private foundation, however, there are differences and limitations.

A Private Foundation is typically used for amounts over $500,000. This is mainly due to the increased administrative and compliance requirements associated with Private Foundations.

Donor Advised funds are also a good fit for those people who do not have anyone to name as a successor private foundation director. They can also be used for donors who want to pre-establish an endowment that can run automatically after their passing, common for establishing an ongoing scholarship.

Donor Advised Funds are also restrictive in the types of assets that can be gifted to them. Art work, collectable's and real estate are usually not allowed as a gifted asset.

Below is a comparison chart that outlines some of the difference between private foundations and donor advised funds.

Donor Advised Funds
Private Foundation
No donor start up costs Start up costs are $4,950

Higher income tax deductibility

  • Cash can be fully deducted at a rate of 50% of AGI

  • Publicly traded securities and real estate can be fully deducted at a rate of 30% of AGI

  • Gift and estate tax deduction of 100%

Lower Income tax deductibility

  • Cash can be fully deducted at a rate of 30% of AGI

  • Publicly traded securities, restricted stock and real estate can be fully deducted at a rate of 20% of AGI

  • Gift and estate tax deduction of 100%
No federal excise tax. 1 to 2% federal excise tax imposed on earnings.
No annual tax return required to be filed by the donor. Federal and state tax returns required to be completed and filed annually. The administrator will do this for you.
All aspects of the account can be done anonymously if desired, no public records. All activiaties and tax returns are public record and can be viewed by the public online.
Grants to charity can be done on your time frame with no annual grants required. Required to distribute 5% of assets annually.
Donors can not participate in management activities and are not permitted to receive compensation. Foundation directors can be actively involved with foundation activities and can be compensated for their work from the foundation.
Limited in the types of assets that can be gifted. Art work, collectable's and real estate can be gifted.
Few regulatory requirements and those are handled by the Fund. Regulatory requirements are extensive. Can be outsource to a third party.

As you can see, there are several differences. Probably the biggest advantage the private foundation has over donor advised funds is the ability of the directors to take a more active roll in the foundation if desired and also receive reasonable compensation from the foundation for their time and activities associated with it.

For more detailed information on Donor Advised Funds you can visit one of our other web sites located at

We are also available to help you review both products and determine which one would make a good fit for your individual goals and situation. just give us a call toll free at 800-535-4720

Click Here to request a copy of our FREE Private Foundation Planning Guide.


Tactical Wealth Advisors, LLP
Investment advisory services are provided through Tactical Wealth Advisors, LLP a Registered Investment Advisor. The information contained on this site is for educational purposes only, it is not intended to be professional tax or legal advise; consult a tax advisor about your specific situation.


Donor Advised Funds

Using a Charitable Trust with a Private Foundation


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