Donor Advised Funds IRC §4966

In my last post about how year end tax planning starts with reassessing one's commitment to charitable donations I mentioned that my Mom donated her appreciated shares of Exon Mobile to a Donor Advised Fund (DAF).

Many readers had questions about what a DAF is and the mechanics of donating to one. So much so I was compelled to follow up in this post.

A DAF, often referred to as charitable gift fund or philanthropic fund, generally allows for a charitable contribution without making a final decision regarding how funds will be used at the time of the donation.

Statutorily, a “donor advised fund” (DAF) means a fund or account that is owned and controlled by a sponsoring organization and separately identified by reference to contributions of a donor. The donor has advisory privileges with respect to the distribution or investment of amounts held in such fund or account as per IRC §4966(d)(2)(A)

A Sponsoring Organizations owning a DAF's should be aware of the following charitable giving tax Issues:

  • It is described in section 170(c)
  • It is NOT a private foundation described in section 509(a)
  • It accepts & acknowledges donations which are immediately tax-deductible to the donor

DAF's are useful because they tend to gap a timing difference allowing a donor to potentially be more generous now with funds used for charitable purposes in future years.

DAF's Appeal To Donors:

  • with a high income year, but distributed charitable intent
  • who plan to fund many small charitable gifts with proceeds from securities
  • whose planned contributions are insufficient to justify the costs of a private foundation
  • who wish to be relieved of the administration of a private foundation
  • wishing to advise the fund regarding distributions


  1. the sponsoring organization ultimately controls investment and distribution decisions.
  2. if the sponsor of the DAF doesn’t have control over the funds the donation might not qualify for a charitable contribution.

John R. Dundon, EA [720-234-1177,]
Enrolled with the United States Department of Treasury to Practice before the IRS (Enrolled Agent # 85353). Under contract with the IRS as a Certified Individual Taxpayer Identification Number (ITIN) Acceptance Agent. A Federally Authorized Tax Practitioner (USC 31 Section 330 + IRC 7525a.3.A) regulated under US Treasury Cir. 230.

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Posted in Charitable Contribution, Donor Advised Fund

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