A donor advised fund is a fund established at a public charity. It allows donors to make a charitable contribution, receive an immediate tax deduction and then recommend grants from the fund over time. A contribution to a donor advised fund allows a donor to make a large charitable contribution in one year which may enable the donor to benefit from a charitable deduction which might not be possible with a smaller gift. The donor can continue to support his or her favorite charities by making distributions from the donor advised fund to those charities in later years.
A gift to a donor advised fund is irrevocable. The donor relinquishes ultimate control of the assets contributed to the public charity administering the fund, even though the fund provides the donor with the opportunity to invest the funds and recommend the charities to be supported from the fund. Donors can generally name the donor advised fund such that gifts may continue to be associated with the donor. Funds in the donor advised funds can be invested and grow tax-free.
A private foundation provides similar benefits to a donor advised fund—a large initial contribution and distributions to charity over time—while allowing for greater control of the funds by the donor through board control. However, there may be additional compliance responsibilities and limits on the amount of deduction associated with gifts to private foundations.
The foregoing is a general discussion of charitable giving strategies and not intended as tax advice. Donors should consult with their own tax advisors regarding the impact of various charitable giving strategies on their specific tax and financial planning objectives.
Rossmoor Scholarship Foundation is a nonprofit public benefit corporation exempt from tax under IRC section 501(c)(3). Its federal tax identification number is 94-6126368. The address of the Foundation is P.O. Box 2056, Walnut Creek, CA 94595.