Using a Donor-Advised Fund

A donor-advised fund (DAF) is one of the most flexible tools in charitable giving. You contribute assets — cash, appreciated stock, real estate, or other property — to a sponsoring organization; you take the tax deduction immediately in the contribution year; and you recommend grants to specific charities over time (this year, next year, or many years later).

For donors who want to support veteran programs strategically, DAFs offer several advantages worth understanding.

The Basic Structure

A DAF has three parts:

• The donor (you) contributes assets and takes the tax deduction
• The sponsoring organization (Fidelity Charitable, Schwab Charitable, Vanguard Charitable, community foundations, and others) holds and invests the assets
• The charities you support receive grants when you recommend them to the sponsor

The sponsoring organization is itself a 501(c)(3) public charity. Your contribution to the DAF is deductible in the year you contribute, regardless of when the grants to end charities are made.

The Tax Timing Advantage

The deduction timing is one of the DAF's core benefits. You can:

• Bunch multiple years of giving into a single high-deduction year (useful for donors near itemization thresholds)
• Contribute in a high-income year and grant to charities across future years
• Accelerate deductions before a life change (retirement, sale of a business, inheritance)
• Contribute appreciated assets without triggering capital gains, then grant cash from the DAF later

The AGI limits for DAF contributions are the same as for direct charitable contributions to public charities:

• 60% of AGI for cash contributions
• 30% of AGI for long-term capital gain property
• 5-year carryforward for excess amounts

See About Publication 526 for the general limits.

Contributing Appreciated Assets to a DAF

DAFs are particularly well-suited to appreciated asset donations because the sponsoring organization has the infrastructure to accept, process, and sell almost any type of appreciated property:

• Publicly traded stock and bonds
• Mutual funds and ETFs
• Private stock and business interests (some sponsors)
• Real estate (some sponsors — with the same appraisal and due diligence as direct property donations)
• Cryptocurrency (most major sponsors now accept BTC, ETH, and other major coins)
• Collectibles, art, and other tangible property (some sponsors)

For appreciated long-term assets, you avoid capital gains tax and deduct fair market value — the same tax treatment as a direct donation to any qualified charity. See Donating Stock to Veterans and How Crypto Donations Work for more.

How Grant Recommendations Work

Once assets are in your DAF, you recommend grants to qualified 501(c)(3) charities through the sponsor's online portal or by paper form. Recommendations require:

• The charity's name (and often its EIN)
• The grant amount
• Whether the grant is for general operating support or a specific program
• Whether you want to be listed as the donor or remain anonymous

Sponsors verify that the recipient is a qualified 501(c)(3) charity in good standing (usually by checking the IRS Tax Exempt Organization Search — TEOS). Most recommendations are processed within days.

There's a minimum grant amount at most sponsors (typically $50 or $100). There's no maximum — you can grant out the full DAF balance at any time.

Recommending Grants to Veteran Causes

To support Salute Veterans Inc. through a DAF, recommend a grant using:

• Charity name: Salute Veterans Inc.
• EIN: 84-2016237
• Address: as listed in your DAF sponsor's charity database

Grants can be made annually, quarterly, monthly (some sponsors offer recurring recommendations), or as one-time gifts. Some donors set up an automatic annual grant of a set amount; others adjust each year based on priorities.

DAF Sponsors to Know

The largest DAF sponsors:

• Fidelity Charitable
• Schwab Charitable
• Vanguard Charitable
• National Philanthropic Trust

Community foundations in most metropolitan areas also sponsor DAFs and offer more personalized service, often at higher minimums. Faith-based DAF sponsors serve specific religious traditions.

Minimum initial contributions vary — Fidelity has no minimum; Schwab starts at $5,000; Vanguard at $25,000; some community foundations at $10,000 or higher.

What DAFs Don't Do

A few limitations to be aware of:

• DAFs cannot grant to individuals, only to qualified 501(c)(3) organizations. If you want to help a specific person, DAF grants can support an organization that serves them, but not the person directly.
• DAFs cannot fulfill legally binding pledges. A verbal or informal commitment is fine; a signed pledge document creates issues.
• DAFs cannot pay for goods or services that provide the donor with a benefit. Tickets to a fundraising gala, auction items, and similar "quid pro quo" transactions can't be paid from a DAF.
• DAFs have no time limit on when grants must be made — but many sponsors expect meaningful grant activity over time, and inactive accounts sometimes receive attention from the sponsor.

Comparing DAFs to Private Foundations

For donors considering a private foundation, DAFs are simpler, cheaper, and offer better upfront tax treatment (though somewhat less control). For most individual donors, DAFs are the more practical option:

• No setup costs (private foundations require substantial legal setup)
• No annual filing requirements (private foundations file Form 990-PF annually)
• No minimum distribution requirement (private foundations must distribute 5% of assets annually)
• Higher AGI limits (60% cash / 30% appreciated property vs. 30% / 20% for private foundations)
• Investment options matched to the sponsor's platform

Private foundations still make sense for very large-scale, multigenerational philanthropy where control and legacy structure matter more than simplicity.

The DAF Advantage for Veteran Support

For donors who want to support veterans strategically over time — matching annual gifts to program needs, responding to emergency situations, funding specific initiatives — a DAF provides a smooth way to give consistently while separating the deduction timing from the actual grant timing.

See Are Veteran Donations Tax-Deductible? for the general framework across donation types.

Ready to Use a DAF to Support Veterans?

If you already have a DAF, recommending a grant to Salute Veterans Inc. takes about five minutes through your sponsor's portal. If you don't have a DAF and want to explore whether one fits your situation, most sponsors have online sign-up. For general guidance and to connect your DAF grant with our team, contact us here.

You can also learn more at DAFDonations.org.