OBCF 101-10- Donor-Advised Funds: Here’s How They Work

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In an effort to better connect with our community and educate people about all of the unique facets of the Community Foundation, we have created OBCF 101.

Have you ever felt passionate about giving back to a cause you care about?

If so, a donor-advised fund (DAF) may be right for you.

Donor-advised funds make giving easy and fun because you are involved in the grantmaking. These types of funds are also a flexible and tax-advantageous way for you to give to your favorite nonprofits.

 

 

 

 

 

Here’s How They Work: 

  • A fund is established by completing and signing a short Endowment Fund Agreement.
  • The donor decides the name of the fund; this is often the name of the donor, his/her family or business, or the name of a person the donor wishes to memorialize. Donor-advised funds preserve the donor’s legacy for generations to come.
  • Donors may also wish to state their fund’s purpose in broad terms (e.g., “to be determined annually”) so that they can be flexible about which causes to support. Donors who establish a donor-advised fund have the opportunity to state a field of interest or fund purpose within their fund agreement.
  • A donor-advised fund can be started with a contribution of at least $1,000. The fund must have a total of $5,000 by the end of a calendar year in order to make a distribution the following calendar year. Contributions can be made at any time to the fund.  If you want to start small and build over time, OBCF allows you up to three years to reach the $5,000 minimum.
  • The Community Foundation administers and manages the fund to make things easy for you. For us, the fun part of working with DAF advisors is helping them with research, ideas, identifying needs, staying in touch and getting to know them.
  • The Community Foundation determines the amount available for distribution each year. In addition, after the fund reaches the required $5,000 minimum, all contributions in a calendar year can be distributed as grants, if the donor so chooses.
If you have a range of community interests, a donor-advised fund is an ideal vehicle for fulfilling your charitable wishes for years to come.

For those who already give generously, a donor-advised fund allows you to become a grantmaker and focus your philanthropy.

Stay tuned for our next OBCF 101!

About the Outer Banks Community Foundation: The Outer Banks Community Foundation is a 501(c)3 nonprofit organization committed to fostering philanthropy and supporting local causes. Through its charitable funds and grant programs, the Foundation strives to enrich the quality of life for residents of the Outer Banks.