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For a smaller initial contribution (as little as $5,000 to $20,000), there may be a more efficient and less costly alternative than a private foundation - such as the Donor Advised Fund (DAF). A DAF can have many of the same characteristics and attributes as a private foundation, but at a lower cost. The trade-off is in flexibility and control.
Donor Advised Funds are funds created by community organizations or certain financial institutions that allow your contributions to be accumulated in the fund instead of being immediately distributed to a charity. Unlike a private foundation, there is no 5% minimum distribution requirement. The fund may invest your contributions in various securities and other investments, typically in mutual fund-type investments.
With a DAF, you will get a tax deduction the year that the contribution is made, subject to the adjusted gross income limits previously mentioned.