Donor advised funds make a difference, maximize tax deductions

As we approach the end of the calendar year, last-minute giving can be a great opportunity to make a difference in your community while maximizing 2023 tax deductions. 

Donor advised funds make it possible to take advantage of tax benefits without having to rush charitable giving decisions.

A DAF is a charitable tool for the sole purpose of supporting charities you care about. Contributions to these funds are typically tax deductible.

Community foundations, like the Delaware Community Foundation, are the primary organizations that help individuals and families create DAFs. Community foundations also help donors learn about the needs of the local community and how to best put their gifts to work to make the changes they want to see.

Contributions to DAFs are at an all-time high as donors recognize the benefits of this powerful giving tool. Nationally, generous people awarded $52 billion in grants through DAFs last year. 

In Delaware alone, the DCF awarded $15.9 million from DAFs to more than 900 nonprofits in 2022. These DAFs, established by generous families and individuals, supported charitable causes including education, workforce development, environmental protection, the arts and more. 

Many donors choose to create a DAF instead of a private foundation because it’s easier, faster, less expensive and requires less administration. 

A community foundation can typically establish a DAF for donors in a matter of hours. The foundation then continues to manage all paperwork and administration, invests and stewards the money, provides advice about grantmaking as needed, and manages the disbursement of funds. 

The donor simply advises the foundation on what grants to make at regular intervals and enjoys watching the impact of their charitable giving. 

A DAF is a great opportunity for people who want to make a last-minute charitable contribution without having to rush decisions about where and how to give. Community foundations partner closely with donors and their accountants or other professional advisors to ensure maximum community impact and maximum tax advantages. 

And for those trying to squeeze in a last-minute tax deduction, there’s still time – but not much. Donations must be made by Dec. 31 for the 2023 tax year.