Podcast Episode Details

What's a Donor-Advised Fund? (And Should You Use One?)

Episode 797

If you’ve ever wished your giving could be both simpler and more strategic, there’s a powerful tool worth knowing about: the donor-advised fund, or DAF for short.

Generosity isn’t just about how much you give—it’s about the heart behind it. As Paul reminds us in 2 Corinthians 9:7, “Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.”

Wise stewardship allows us to align our giving with God’s purposes, using tools that help us maximize our Kingdom impact. A donor-advised fund—when used rightly—can help you do both: give joyfully and steward resources efficiently.

What Is a Donor-Advised Fund?

Think of a DAF as a charitable checking account designed to support the causes you care about. You contribute cash, stock, or other assets, receive an immediate tax deduction, and then recommend grants to ministries or charities on your timetable.

In other words, it separates the act of giving from the act of distributing. You might contribute during a high-income year or before selling an asset to take advantage of tax benefits, while taking time to decide where those dollars should go prayerfully.

Behind the scenes, your DAF is managed by a sponsoring organization. At FaithFi, we recommend the National Christian Foundation (NCF)—one of the largest and most trusted Christian providers, founded by Larry Burkett and Ron Blue. NCF handles the record-keeping, issues the grants, and provides online tools to manage your giving.

Suppose you plan to sell a business or a piece of real estate that would normally result in a significant capital gain. By donating it to your donor-advised fund before the sale, you can avoid paying capital gains tax, allowing more of the donation to go directly to Kingdom purposes.

You receive an immediate tax deduction for the full value of your gift since it’s considered an irrevocable charitable contribution. The funds can be invested for potential growth while you prayerfully decide which ministries to support—or you can give immediately.

When you’re ready, you simply recommend a grant, such as $10,000, to your church or a mission organization. The DAF sponsor verifies the charity and then sends the gift—either in your name or anonymously.

The Benefits of a Donor-Advised Fund

Donor-advised funds have become the fastest-growing vehicle for charitable giving in America, and for good reason. They combine flexibility, simplicity, and intentionality—all with a focus on Kingdom impact.

Here are some of the key advantages:

• Simplicity – One contribution can fund all your charitable giving, with a single tax receipt and one dashboard to track every grant.
• Tax Efficiency – Receive your deduction when you contribute, not when you give. Donating appreciated assets can help avoid capital gains taxes, increasing the amount that goes to ministry.
• Flexibility – Give now and decide later where the funds should go, allowing generosity even as you discern where God is leading.
• Legacy Planning – Name successors—such as children or grandchildren—to carry on your legacy of generosity.
• Focus on Mission – Since the administration is handled for you, you can focus your energy on prayerfully deciding where to give.

Important Limitations to Consider

No giving tool is perfect. Here are a few things to keep in mind:

• Irrevocability – Once you contribute to a DAF, it’s a completed gift—you can’t take the funds back.
• Qualified Recipients – Grants can only be made to IRS-approved charities, not individuals or political causes.

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  Published on 3 days, 17 hours ago