Why private foundations are opening donor-advised funds

May 03, 2024

If you’ve heard about private foundations opening donor-advised funds (DAFs) and wondered “Why would you need both?”, you’ve found your answer. Read on for insights into how these two giving vehicles can be a powerful combination. 


The basics of private foundations and donor-advised funds 


Typically, donors will choose between a private foundation and a DAF. Both giving vehicles allow individuals to contribute, or donate, to the account or foundation. The donated funds are committed to charitable purposes and are invested to potentially grow while being granted out. 


Despite their similarities, there are many variables that might make a donor-advised fund or a private foundation a better choice over the other. It all depends on what a donor is looking for in their giving vehicle. For example, a DAF is easier to establish, and donors can rely on the DAF sponsor to handle administrative requirements. Establishing a private foundation, on the other hand, is more complex and leaves the donor with all the administrative responsibilities, though they can select a board and staff to run their foundation. 


You can learn more about the differences between private foundations and donor-advised funds at the link below.

Can a private foundation give to a donor-advised fund? 


While a donor might select one giving vehicle over the other, they don’t have to. It’s easy for private foundations to add a DAF to their larger philanthropic strategy. This is because private foundations can issue grants to donor-advised funds. 


While there are restrictions on the types of organizations private foundations can give to, private foundations can give to public charities. As a DAF sponsor, Vanguard Charitable is a 501(c)(3) public charity. Funds contributed to a DAF from a private foundation are committed to charity and grants subsequently must go to public charities in good standing with the IRS. 


Reasons for adding a DAF to your philanthropic toolkit 


Private foundations and DAFs each have unique benefits. Adding a DAF to your philanthropic strategy, even if you already have a private foundation, increases your giving potential. 


We spoke with our donors who leverage both a private foundation and a DAF to support their philanthropic goals. Here are a few reasons they offered about why they added a Vanguard Charitable DAF to their giving portfolio: 


  • Charitable giving flexibility. With a DAF, you can grant to any 501(c)(3) public charity in good standing with the IRS. You can also set your own giving timelines. By opening a Vanguard Charitable account, you get all the flexibility of a DAF while still maintaining your private foundation. 


  • Low-cost, high-quality investments. Opening a Vanguard Charitable DAF gives you immediate access to a carefully curated list of high-quality investment options with solutions to fit any investing strategy. Some donors use their DAF to leverage the same investments they have at their private foundation but for a lower cost. 


  • Reduced costs on your philanthropy. With the industry’s lowest all-in fee, Vanguard Charitable helps you grow your philanthropy without growing your expenses. And these low fees translate to access to expert charitable guidance and account support. 


  • Support for complex charitable giving. Whether you’re wanting to directly contribute complex assets or looking for help with international or complex granting, you can find best-in-class support with Vanguard Charitable. 


Discover the benefits of adding a DAF 


Once a donor opens a Vanguard Charitable account, they immediately have access to expert service and guidance, support for donating complex assets, and a curated list of low-cost investment options. The philanthropic support provided by a Vanguard Charitable DAF is oftentimes crucial to those with private foundations seeking to expand their philanthropy without increasing the cost of bringing on additional resources or expertise. 


If you’d like to start experiencing these benefits for yourself, open a Vanguard Charitable donor-advised fund today. 

Vanguard Charitable leaf icon
Vanguard Charitable leaf icon
Published Date

Session timed out

For security reasons, you have been automatically logged out. To login, please click close and sign into your account.

Log out successful

This account is frozen. Contact us at donorservice@vanguardcharitable.org.
Request for user ID submitted

Your request was successfully submitted.Your user ID will be sent to the email address we have on file for you. Please contact us if you do not receive your user ID.
There are no open accounts associated with this User ID. Please contact us at donorservice@vanguardcharitable.org.
Online access to your account is currently disabled. Please contact us at donorservice@vanguardcharitable.org to resolve this matter.

Log out successful

Login with your new User ID.

Log out successful

Login to access your account.
You do not currently have valid roles for any accounts. Please contact us at donorservice@vanguardcharitable.org.

A technical error has occurred

In order to maintain information security, your log-in request was canceled or your previous session ended.
Don't worry. You can log back in at any time.


Technical error. Please try again.

Log out successful

Login to update your phone number.

Technical error

You have reached a technical error and this session is not currently available.
Your email address was successfully verified.
Your account has been unblocked. Click login to access your account.

It’s not you. It’s us!

We are experiencing a technical error and we’re working on it. Please try again later.

You are unauthorized to access this page.


Maintenance fee may be applied

Accounts having a balance below $25,000 may be subject to an annual maintenance fee of $250.


You are eligible for special rates

Our premier clients enjoy reduced pricing to further maximize their impact.

Our representatives are happy to guide you through.

No, take me back


Click OK to cancel your enrollment.

Click Cancel to continue opening your account.