What Is a Donor-Advised Fund (DAF)?

When it comes to giving back, most people want two things: impact and simplicity. A Donor-Advised Fund (DAF) offers both—helping donors maximize their charitable giving while simplifying the process.

Understanding the Basics

A donor-advised fund is like a charitable investment account dedicated to supporting the causes you care about. When you contribute cash, appreciated securities, or even complex assets (like business interests or cryptocurrency), you’re making an irrevocable donation to a public charity that sponsors DAFs—such as Fidelity Charitable®.
Your contributions are eligible for an immediate tax deduction, and the funds can be invested for potential growth, allowing you to recommend grants to IRS-qualified public charities over time. ¹

Why People Choose DAFs

According to Fidelity Charitable, the largest DAF sponsor in the country, DAFs have become a preferred tool for philanthropists because they combine flexibility, efficiency, and tax advantages. Here are the key benefits:

• Immediate tax benefits: Contributions may be deductible up to 60% of AGI for cash and 30% for appreciated assets. ²
• Tax-free investment growth: The assets inside a DAF can grow tax-free, potentially increasing your giving power. ¹
• Simplicity: One contribution can fund multiple charitable grants over time, and the sponsoring organization handles record-keeping and due diligence. ³
• Anonymity when desired: You can choose to make grants in your name or anonymously—offering flexibility not always available with private foundations. ¹
• Low cost and low maintenance: Unlike private foundations, DAFs have no setup costs or annual filings, making them an accessible option for most donors. ¹

What Can You Donate?

While cash and publicly-traded securities are the most common, DAFs can also accept complex assets—including private company stock, limited partnership interests, or cryptocurrency. These gifts can often be more tax-efficient than cash donations since donors may avoid capital gains taxes while receiving a deduction for the fair market value. ¹

How It Works

1. Open a “Giving Account®” with a DAF sponsor like Fidelity Charitable® or through your advisor’s platform. ¹
2. Contribute assets—cash, stocks, or other approved assets—to the account.
3. Receive an immediate tax deduction.
4. Recommend investments within your account for potential growth.
5. Recommend grants to IRS-qualified charities whenever you’re ready. ¹

How a Donor-Advised Fund Works

Five simple steps to strategic charitable giving

1

Open Giving Account

Establish your DAF with Fidelity Charitable® or your advisor's platform

2

Contribute Assets

Donate cash, securities, or complex assets to your account

3

Receive Tax Deduction

Get immediate tax benefits—up to 60% AGI for cash, 30% for securities

4

Invest for Growth

Assets grow tax-free, potentially increasing your charitable impact

5

Grant to Charities

Recommend grants to IRS-qualified charities on your timeline

💰

Tax Efficient

Immediate deduction & tax-free growth

✨

Simple

No setup costs or annual filings

🎯

Flexible

Grant when and where you choose

DAFs vs. Private Foundations

For many donors, DAFs provide a streamlined alternative to private foundations. They offer greater tax efficiency, lower administrative burden, and more privacy—though foundations still have value for those seeking full control over grant-making and governance. ³

A hybrid approach—using a foundation for legacy or family governance alongside a DAF for flexible, anonymous, or tax-efficient giving—is increasingly common among sophisticated philanthropists.

The Bottom Line

A donor-advised fund can be one of the most powerful tools for charitable giving—combining tax advantages, strategic flexibility, and ease of administration. Whether you want to make a single large gift this year or create a long-term charitable plan, a DAF can help you give more effectively and make a greater impact.
At Fortress Financial Group, we help clients integrate charitable giving strategies into their broader financial plans. If you’re interested in exploring a donor-advised fund or want to compare options like Fidelity Charitable®, we can help you design a giving strategy that aligns with your values and maximizes your impact.

References

[^1]: What is a donor-advised fund? – Fidelity Charitable. https://www.fidelitycharitable.org/guidance/philanthropy/what-is-a-donor-advised-fund.html
[^2]: Giving Account – Fidelity Charitable. https://www.fidelitycharitable.org/giving-account/what-you-can-donate.html
[^3]: Charitable giving vehicles – Fidelity Investments. https://www.fidelity.com/learning-center/personal-finance/charitable-giving/charitable-giving-vehicles
[^5]: What it costs – Fidelity Charitable. https://www.fidelitycharitable.org/giving-account/what-it-costs.html

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Disclosure

Fortress Financial Group (“Firm”) is a registered investment adviser. This blog post is for general informational purposes only and does not constitute investment advice or a recommendation of any specific product or strategy. Past performance is not indicative of future results. All investing involves risk including the potential loss of principal. The Firm may recommend or use the services of outside custodians, platforms, or sponsoring organizations (such as Fidelity Charitable) but remains fiduciary to its clients. More detailed information about the Firm’s services, fees, conflicts of interest and disciplinary history is available in Form ADV Part 2A and Form CRS, which we will provide upon request or you may visit our website.

The content above is not intended to constitute tax or legal advice; you should consult your attorney or tax advisor regarding your unique situation.