Choosing the Right Donor-Advised Fund for High-Net-Worth Individuals

If you give to charities and care about making the most of the tax deductions, chances are you’ve come across the idea of using a donor-advised fund  (DAF) in your philanthropic journey. Maybe your financial advisor has even nudged you in that direction. Our DAF guide reviews what donor-advised funds are and how they work to make the most of your donations and tax benefits.

But let’s cut through the jargon and dive into the heart of what really matters when choosing the right donor-advised fund.

This isn’t just about parking your charitable dollars somewhere; it’s about maximizing impact, ensuring flexibility, and making the most of your hard-earned wealth.

1. Who’s Holding Your Funds?

National Charities vs. Community Donor Foundations

First, let’s talk about the organization that’s sponsoring your DAF. Sure, big names like national charities or financial services firms might offer convenience and brand recognition, but don’t overlook community foundations. These often have deep roots in local causes and can provide a level of personal touch and expertise that larger organizations might not.

Glassman Wealth Pro Tip: If your charitable giving is hyper-local or you want a closer relationship with your charitable advisor, a community foundation might be your best bet.

2. Watch Those Fees

Next up, donor-advised fund fees and minimums. These might sound like small potatoes, but over time, they can eat into the funds available for your charitable giving. It’s not just about the upfront costs—think about the long-term impact of annual fees and minimum grant sizes. Some DAFs might require minimum contributions that could tie up more of your capital than you’d like.

Glassman Wealth Pro Tip: Compare funds, and look for a DAF charitable investment account with transparent fee structures and low administrative costs to ensure more of your money goes where it’s needed most.

3. DAF Investment Options: More Than Just a Return

Now, let’s get into the investment side of things. DAFs aren’t just about giving—they’re about growing your charitable dollars, too. Some funds offer a range of investment options that allow you to align your philanthropic dollars with your personal investment philosophy. Whether you prefer conservative or aggressive growth, the right investment strategy can amplify your impact.

Glassman Wealth Pro Tip: If you have a trusted financial advisor, consider a DAF that allows them to manage the investments, keeping your giving aligned with your broader financial strategy.

4. Flexibility in Giving

Grantmaking flexibility is another critical factor. Not all DAF accounts are created equal in this regard. Some offer the ability to give anonymously, support international causes, or provide grants over time. This flexibility can be crucial if your philanthropic interests are diverse, or if you value privacy in your charitable giving.

Glassman Wealth Pro Tip: If you’re considering legacy giving or want to make a significant impact over time, choose a DAF that offers multigenerational grantmaking and succession planning options.

5. Beyond the Basics: Charitable Support and Due Diligence

What about the nitty-gritty of grant approval? This is where many people have their “aha” moment. The level of due diligence a donor-advised fund performs on charities can vary widely. Some might dig deep, ensuring your donations are going to legitimate causes, while others might be more hands-off.

Glassman Wealth Pro Tip: If you plan to support smaller or lesser-known organizations, opt for a DAF with a rigorous vetting process to safeguard your giving.

6. Don’t Overlook Tech and Experience

Finally, don’t underestimate the importance of technology and user experience. A DAF account with a sophisticated, easy-to-use platform can make managing your charitable contributions and grants a breeze. After all, philanthropy should be a joy, not a chore.

Glassman Wealth Pro Tip: Spend some time exploring the online tools offered by potential DAFs. A good platform will make it simple to track your giving, manage investments, and even explore new philanthropic opportunities.

The Bottom Line on How to Choose the Best DAF

Choosing the right DAF is about more than just tax deductions and benefits. It’s about aligning your charitable giving with your values, maximizing your impact, and ensuring that your philanthropy is as effective and rewarding as possible. So, take a closer look, ask the right questions, and make sure your donor-advised fund isn’t just a box you check off, but a powerful tool in your philanthropic arsenal.

Find out how Glassman can help you choose a DAF that’s right for you. [Link to contact form]

Explore how to make the most of your charitable donations and DAF:

• Your Guide to the Donor-Advised Fund: A Powerful Tool for Charitable Giving
• Rethinking DAFs: Impactful Charitable Contribution & Tax Benefits
• How DAFs Can Maximize Charitable Donations & Tax Deductions
• Qualified Charitable Distributions from IRAs vs. Donor-Advised Funds
• Smart Charitable Contribution Strategies for Standard Deductions