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Soles4Souls

Donor-Advised Funds 101

Sep 24, 2025
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How DAFs Can Help You Do Even More Good in the World

If you’re like most people, you donate to causes you care about to help make the world a better place. What if you could increase your impact and decrease your tax liability at the same time?

 

Let’s talk about Donor-Advised Funds.

 

Please keep in mind that the information in this post is for educational purposes and should not be taken as financial advice. Please chat with your professional advisors to see if a DAF is the right fit for your charitable giving and tax goals.

What is a Donor-Advised Fund (DAF)?

A Donor-Advised Fund (DAF) is a charitable giving account that comes with specific tax advantages. A bit like using a 401K account to invest money for your retirement, a DAF allows you to invest resources for the purpose of supporting charitable causes you care about. 

Using a DAF to make gifts (also called grants) to your favorite eligible charities is super simple:

  1. You open a DAF account and make contributions of cash, securities, and/or appreciated assets. 
  2. Your DAF provider (see “Establishing a DAF” below) invests your resources in the market, based on your values and preferences.
  3. You recommend gifts to be made from your DAF to eligible charities.

Why People Love Giving via DAF

More and more people are choosing DAFs for their charitable giving. There are nearly 2 million active DAF accounts totaling nearly $60 billion! Here’s why people love them:

  • Contributions to your DAF may be tax-deductible, and giving appreciated assets can help you avoid capital gains taxes.
  • You get to decide when and where to give. (And your contributions can even grow tax-free, which means you’ll have more to give!)
  • Many donors find having a DAF inspires them to give more consistently and intentionally.

What to Know Before You Open a DAF

  • Tax advantages vary. Contributions to your DAF may be tax-deductible depending on how much you put in, whether you itemize deductions on your tax return, and whether you give appreciated assets.
  • Contributions are tax-deductible at the time you add them to your DAF, not at the time you make gifts to your charities of choice. For example, if you add $10,000 to your DAF,  and then recommend gifts of $7,500 to Soles4Souls and $2,500 to another eligible charity, only the initial $10,000 contribution may be tax-deductible.
  • You recommend gifts to your DAF provider. Their decision to release funds is based on a number of factors, which your DAF provider will share with you.
  • DAF contributions are irrevocable. Funds can only leave your DAF account as a donation to an eligible organization. You can’t withdraw funds from a DAF for personal use—not even at a penalty.

 

Establishing a DAF

Similar to how a financial advisor might manage your 401k or brokerage investments, DAF accounts are managed by community foundations, financial institutions’ charitable affiliates, and some independent providers. 

 

You have your choice of more than 1000 DAF providers in the U.S., and many have different policies and resources. 

As you explore your options, ask these questions:

  1. What is the minimum account size, minimum gift or grant size, and minimum annual payout?
  2. Can I make repeat contributions to my DAF? Are there restrictions on frequency?
  3. Where will my assets be invested? Do I have any say in that? Can my personal financial advisor manage my account? 
  4. What specific cause, religion, or nonprofit is the DAF provider aligned with, if any? Are they likely to approve gifts to organizations you care about, or are there values-based giving restrictions?
  5. How long does it take to establish an account, and how do I access it? What’s the onboarding experience like? How do I recommend grants and how long does the approval process take?
  6. What are the fees associated with the provider’s services? Are those fees static, or do they vary depending on account size, different types of contributions, and so on? 

Giving by DAF to Soles4Souls

Recommending DAF gifts to Soles4Souls is easy and free. If your DAF holder is Fidelity Charitable, DAFgiving360, or BNY Mellon, you can donate funds from your DAF directly from our website—and neither you nor Soles4Souls incurs download or transaction fees.

 

Already have a DAF? Give by DAF today!

 

If your DAF is held at another institution, please contact your DAF provider directly to make your grant recommendation.

 

Legal Name: Soles4Souls

Tax ID: 20-4023482

Physical Address: 2469 Bransford Ave. Nashville, TN 37204

Mailing Address: MSC 7545 Soles4Souls Inc. PO BOX 415000 Nashville, TN 37241-5000

 

We are a tax-exempt, charitable institution with a 4-star rating from Charity Navigator.

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