Donor Advised Fund Agreements

Donor Advised Fund Agreements: What You Need to Know

If you`re looking to make a meaningful charitable donation, you may have heard of donor advised funds. These are charitable giving accounts that allow you to make a tax-deductible contribution to a fund, and then recommend grants from that fund to eligible charities over time. Donor advised funds can be a great way to support causes you care about, while also taking advantage of tax benefits.

However, before you open a donor advised fund account, it`s important to understand the terms of the agreement you`ll be signing. Here are some key elements to look for in a donor advised fund agreement:

1. Fees and minimum contributions. Donor advised funds often charge administrative fees and require a minimum initial contribution. Make sure you understand these costs, as they can impact the overall effectiveness of your giving.

2. Eligible charities. Not all charities are eligible to receive grants from donor advised funds. Make sure the agreement lists the types of charities that are eligible, and that your preferred charities are included.

3. Grantmaking process. Find out how grants are requested and approved. Are there any restrictions on the size or frequency of grants? What is the timeline for processing grants?

4. Investment options. Donor advised funds typically offer investment options for the funds you contribute. Make sure you understand the investment options and their associated risks and fees.

5. Succession planning. If you pass away, what happens to the remaining funds in your donor advised fund? Make sure the agreement includes a succession plan that aligns with your wishes.

6. Donor privacy. Some donor advised funds allow you to remain anonymous when making grants. If donor privacy is important to you, make sure the agreement reflects this.

By understanding the terms of your donor advised fund agreement, you can ensure that your giving aligns with your values and goals, while also maximizing the tax benefits of your contributions. Consider working with a financial advisor or attorney to review your options and make the most informed decision.