A donor advised fund through the Greater Lynchburg Community Foundation provides a simple, flexible and tax-efficient way to streamline your charitable giving.
You make a gift to establish the fund and then remain actively involved in suggesting grants from the fund to the nonprofit organizations you wish to support.
The ease of use and potential tax advantages make donor advised funds the fastest-growing charitable giving vehicle in the nation.
How it Works
- Make a gift to the community foundation of cash, appreciated stocks, real estate or other assets.
- We set up a fund in your name, in the name of your family or businessor in honor of any person or organization you choose.
- You recommend grants from the fund to your favorite nonprofit organizations.
- You may receive tax benefits in the year your gift is made.
- Our professional staff ensures the nonprofits you wish to support are in good standing. Our team is available to help you learn about new organizations doing good work that aligns with your interests in the community.
What is a Donor Advised Fund (DAF)?
A donor makes an irrevocable gift to the GLCF in order to create a new donor advised fund, which may be named according to the donor's wishes.
Once established, additional gifts can be made to the donor advised fund.
Donor advised funds are permanently endowed funds. Because they are endowed, the full amount of the fund is not available for spending. Rather, a portion of the investment proceeds (5% of the fund's average balance over 12 quarters) is available to become a grant. The assets in the fund are invested according to GLCF policies, and grow over time.
In the future, the donor will have the ability to make grant recommendations from that fund to a 501c3 organization of their choice.
Why Create a Donor Advised Fund (DAF)?
Donor advised funds are created so that the donor can remain involved in the grant making process from the fund.
What is the minimum amount needed to establish a DAF?
A gift of $10,000 or more can be used to establish a fund. If you would like to start with a smaller gift, please contact the GLCF about “acorn funds” that can be built up over time.
Who “owns” the DAF?
Establishment of a donor advised fund represents an irrevocable gift to the Greater Lynchburg Community Foundation (GLCF). This fund becomes the property of the GLCF. The fund and its income therein are administered by GLCF.
How do donors make grant recommendations?
The donor advisor may submit recommendations regarding the distribution of income from the DAF. Because the fund is owned and administered by the GLCF, and to protect the charitable deduction for tax purposes, a recommendation constitutes a suggestion only and is not binding. However, recommendations are given great consideration and usually carried out.
GLCF will notify all donor advisors how much is available for granting from the fund during our grant cycles (spring and fall annually). Donor advisors can notify GLCT in writing their recommendation for distribution of the available amount.
What are the primary limitations of a DAF?
• may not be used to fulfill a legally binding pledge of the donor
• may not be used to pay for any tangible benefit for the donor, advisors, and related parties. (membership dues, attending a fundraising event, etc.)
• may only be used for grants to 501c3 organizations
Other limitations / futher details will be listed in the donor advised fund guidelines and fund agreement forms
Will the grantee be notified about a DAF grant?
GLCF will name the Donor Advised fund to a grantee that receives a distribution from it.
What happens if there is no longer an advisor?
If the advisor becomes unable to advise their fund for any reason, the fund shall become an Unrestricted Fund at the GLCF unless the donor has name a successor advisor or specified a charitable agency at the time the fund was established, in which case it becomes a Field-of-Interest or Designated Fund. The Fund will continue to carry the name given by the Donor.
What forms are needed to establish a DAF?
Sample Donor Advised Fund Form
Once the fund established, the donor advisor will be asked to complete a Grant Recommendation Form twice per year.
Advantages of a DAF at the GLCF
- We handle all the administrative details and issue grants to charities in the name of the fund you establish. (If you prefer, grants can be made anonymously.)
- Your gift can be placed into an endowment that is invested over time. Earnings from your fund are used to make grants addressing community needs.
- Your gift—and all future earnings from your gift—is a permanent source of community capital, helping to do good work forever.
- Donor advised funds offer simplified record keeping. You have one tax receipt for the gift you make to your fund in place of multiple receipts from the nonprofits you support. You can add to the fund at any time and may receive tax benefits with each new gift.
- Donor advised funds are typically less costly and easier to administer than other forms of philanthropic giving (such as family or corporate foundations).
- You can establish a fund today and make grant recommendations now or in the future.
- You have the ability to involve the next generation in recommending grants from your fund and create a legacy of family philanthropy.