Can private foundations and DAFs be used together?
While you may choose just one giving vehicle, it’s important to note that someone with a private foundation can open a DAF and vice versa to leverage the benefits of both options. While a DAF cannot grant to a private foundation, a private foundation can give to a DAF. This can mean greater flexibility for your overall giving.
Which is right for you: DAF or private foundation?
When choosing between a donor-advised fund and private foundation, you should first identify your philanthropic goals. Depending on your charitable giving approach, one will likely be better for you than the other. Carefully review the differences above and consider how they align with your approach to giving.
However, DAFs are easier to setup and manage as the administrative requirements are all the responsibility of the account’s sponsor. It’s also more cost-effective, meaning your donations go to charity rather than fees, payroll, and investment taxes.
If you’re looking to maximize the tax benefits of strategic charitable giving, grant with timeline and acknowledgement flexibility, and keep costs low to give more to charity without having to operate a standalone charitable organization, a donor-advised fund is likely right for you.