Philanthropy Series Part One - Donor Advised Funds (DAFs): Your Charitable Basecamp

If you’ve ever planned a multi-day hiking trip, you know the value of a solid base camp. It’s the place where you regroup, refuel, study the map, and decide where to head next. Your base camp serves as a steady and stable foundation, while giving you the flexibility to explore many different paths.

In a similar way, a donor-advised fund (DAF) can serve as the base camp for your philanthropic adventures. If you’re passionate about wildlife conservation or other worthy cause, a DAF can help you stay organized, strategic, and tax-focused while making a meaningful impact.

Let’s take a look at the basics of using a DAF and how it can help support your entire family’s charitable goals for generations to come.

How DAFs Work

A donor-advised fund acts like a charitable investment account. You contribute cash, appreciated securities, or other eligible assets to the fund and receive an immediate tax deduction in return. Once held in the DAF, the assets can be invested and grow tax-free while you take your time deciding which charities to support.

When you're ready, you (or other family members) can recommend grants to qualified nonprofits of your choosing. You can give all at once, though it’s more common to spread distributions out. That flexibility—along with the ability to grow your contribution before it’s granted—is part of what makes a DAF so useful.

Contribute assets whenever it makes sense financially, and let them grow over time. If the need arises, your fund gives you the ability to act quickly in response to disasters, policy changes, or urgent community needs. And because you have a say in where your funds are distributed, your DAF enables your family to support a range of causes that hit close to home.

From a tax standpoint, DAFs offer multiple advantages that are certainly worth keeping in mind. Initial contributions are immediately tax-deductible, even if funds aren’t distributed to charity until a future tax year. No capital gains tax is triggered when you contribute appreciated assets, and earnings within the account grow tax-free.

Why Choose a DAF Over Direct Giving?

You absolutely can give directly to the causes you care about. But sometimes, especially with more complex assets or larger gifts, direct giving isn’t the most efficient route.

Let’s say you own appreciated stock. Selling it means paying capital gains tax. Depending on how long you’ve held the asset before selling, your capital gains tax rate could be as high as your ordinary income tax rate (up to 37%). But if you transfer those appreciated assets directly to a DAF instead, no capital gains tax is collected. Your full contribution remains intact and can continue compounding and growing within the fund. That means more money for the causes you care about, and less tax liability for you.

Plus, some years you might receive more income than usual. Maybe you’ve decided to sell your business or received a sizable inheritance. When that happens, you always have the option to contribute more to your DAF, take the charitable deduction now, and stick to your long-term giving strategy. In other words, the DAF gives you a place to pause, breathe, and plan—just like a base camp at the bottom of a mountain.

Get the Whole Family Involved in Giving

For many of the families I work with, giving back is a shared value. A DAF is a great way to bring everyone into the conversation, especially across generations. It gives families an effective tool for teaching about financial stewardship, plus other critical financial concepts like investing and the power of compounding interest. 

If you haven’t already, invite your children or grandchildren to help with selecting specific causes and researching charities you might want to support in the future. Want to make sure your donation to a wildlife nonprofit or conservation group is going to make a difference? Use third-party tools like Charity Navigator to evaluate an organization’s transparency, trustworthiness, and impact. 

Built to be a meaningful legacy vehicle, your DAF can easily and seamlessly transfer to the next generation as a means of continuing your family's philanthropic journey.

Build Your Basecamp With DAFs

If you’re already giving regularly to a few nonprofits you love, but wish you could be more strategic, a DAF can serve as a foundational element of your tax-conscious, multigenerational giving strategy, thanks to its flexibility and tax advantages.

Having a dedicated charitable investment account gives you the opportunity to slow down, chart your course, and make sure your giving is aligned with both your values and long-term financial picture. 

As with any financial strategy, it’s helpful to talk through your goals with a trusted advisor. I’d be happy to help you think through whether a DAF fits into your overall financial and philanthropic plan. After all, every great adventure starts with a strong base camp—and the same is true when it comes to giving.