Private Foundation vs Donor-Advised Fund
Summary
We talk with emerging and experienced philanthropists every day, and one of the most common questions we hear is: should I choose a private foundation or a donor-advised fund to formalize my giving? On the other hand, a donor-advised fund (DAF) is a giving account that is offered by and housed in a public charity, which may be connected to a community foundation, a financial institution, or a university. “Private foundations typically require more involvement than DAFs, but they also provide more control over the investments and the grantmaking, which appeals to some donors, particularly those who are more entrepreneurial,” says Darren Henderson, a partner at Corient Capital Partners, who recently sat down with Foundation Source to discuss how to be most effective in helping wealthy families with charitable planning. (Note: DAF policies and procedures vary by the sponsoring organization and this information is based on standard common practice.) The advantages to using both include the potential for additional tax deductions and a full spectrum of options to amplify their philanthropic and wealth planning goals.
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