Donor Advised Funds
A Donor Advised Fund (DAF) is a named, charitable fund managed by the WSU Foundation from which future grants will be made to WSU and can be made to other qualified charities. One or more individuals, usually the donors, are named as the fund advisors and actively participate in recommending grants to WSU and other qualified nonprofit organizations. DAFs are a popular tool for families wishing to perpetuate their philanthropy because they are simple, flexible, and cost-effective for donors of average wealth to practice, teach, and involve their families.
It is possible for other individuals, such as friends or family members, to donate to your DAF and receive a tax deduction for their contribution. You may even choose to designate a family member to perpetuate grant activity for up to thirty years after your death, continuing your legacy of giving.
Benefits of a Donor Advised Fund (DAF)
A DAF allows you to support your favorite WSU priorities as well as those of other qualified charities.
DAFs offer a personalized approach to philanthropy. Establishment of and additions to your DAF may be tailored to fit your need to generate a charitable income tax deduction. You may also time your grant requests to fit the needs of WSU or your other favorite charities.
A DAF can be established with cash, publicly-traded or privately-held stock, or other property. Most gifts of appreciated property are deductible at full market value. Assets are deposited in an investment account where they grow tax-free.
You receive a charitable income tax deduction when you transfer assets to the DAF because the WSU Foundation becomes the exclusive owner of assets within the fund.
Anonymous grants can be arranged if you prefer.
A DAF eliminates many of the burdens associated with a private/family foundation, such as excise taxes, certain administrative costs, and extensive public and legal filings. Contributions to a DAF are also deductible at the highest limits, unlike gifts to a private foundation.
How a Donor Advised Fund (DAF) Works
Complete a DAF agreement and make an irrevocable gift to establish your named DAF with the WSU Foundation. Once you receive a gift receipt documenting your charitable gift, you may begin to recommend grants to WSU and/or other qualified charities.
Submit your grant recommendations in writing by mail, e-mail, or fax. WSU Foundation staff will be available to work with you to identify areas within WSU that meet your philanthropic goals. The WSU Foundation investigates each organization to ensure consistency with our DAF policies. We contact each organization to request a copy of its annual report, IRS Form 990, board member roster, program description, and documentation of tax-exempt status. All grant recommendations are presented to the WSU Foundation's Gift Acceptance and Management Committee for review and approval.
Once the grants have been approved, checks are mailed to the recipient organizations. The check includes the name of your DAF, your name, and your address so that the organization can personally thank you (unless you designate the gift as anonymous). At this time, you receive confirmation from The WSU Foundation that the grants were approved and paid.
The WSU Foundation will also provide you with an annual statement regarding your DAF. This statement includes fund balance, investment holdings, account performance, and a schedule of grants made during the previous calendar year.
When your DAF terminates, or if your DAF has been inactive for three consecutive years, the funds will be distributed in accordance with your DAF agreement.
WSU Foundation DAF Guidelines
The WSU Foundation offers two types of DAFs: Endowment and Pass-Through. Most terms are negotiable.
Endowment Donor Advised Fund (Long-Term Fund)
An endowment-type DAF is generally expected to distribute income only, usually on an annual basis, with occasional larger grants from the principal. The suggested minimum initial contribution to create an endowment-type DAF is $250,000.
Pass-Through Donor Advised Fund (Short-Term Fund)
Pass-through DAFs are created when the entire fund (income and principal) is distributed within 12 to 18 months following the date of the gift. The suggested minimum contribution for a pass-through type DAF is $25,000.
Guidelines for Both DAF Types
At least 50% of the annual grants from your DAF should go to the WSU Foundation, meaning that at least 50% of the fund should be distributed to the Washington State University Foundation upon termination of the fund. Each grant made to qualified charities other than the WSU Foundation should be at least $2,500. Any addition to an existing endowment-type fund should be at least $10,000.