What it is
A donor-advised fund is held by a sponsoring charity, with a donor retaining advisory privileges over eligible grants or investments under the sponsor’s rules.
Why it exists
It separates making a charitable contribution to the sponsor from recommending later grants to operating charities.
When it may help
It helps an existing donor organize the sponsor, advisory role, successor instructions and grants already recommended.
When it may not fit
It does not preserve personal ownership of contributed assets or provide a household emergency fund. Advice is not unrestricted legal control.
Tradeoffs and access
Contributions are generally irrevocable. Sponsors apply grant eligibility rules, fees and investment choices. A successor adviser or charitable succession plan must be arranged through the sponsor, not just noted in Planstead.
Tax considerations
An eligible contribution may have deduction treatment at the contribution stage; a later grant is not a second deduction for the donor. QCD recipient rules generally exclude donor-advised funds.
Common mistakes
Do not count a fund balance as spendable retirement money, promise a grant before sponsor approval, or assume every recipient is eligible.
Fictional example
Fictional Sam records a sponsor-held balance separately from personal assets and confirms who can advise grants after Sam’s death.
Questions to ask
Who legally controls the fund? What fees and grant restrictions apply? What successor options exist? Which records substantiate the original contribution?
What to record in Planstead
Record sponsor, safe reference, charitable purpose and succession contact in Charity, clearly identifying advisory rather than ownership rights.
Next step
Read the sponsor agreement and consult a qualified tax adviser before contributing or proposing a complex grant.
Sources
- IRS — Donor-advised fund guidance ↗
- IRS — Charitable contributions ↗
- IRS — IRA distributions and QCDs ↗
Primary sources reviewed 2026-09-14. A source describes its own rules; the fictional examples illustrate questions, not a recommendation.