# Why donor-advised funds Donor-advised funds are tax-deductible financial accounts for giving sponsored by a 501(c)(3) public charity. Similar to a foundation, donors may receive upfront tax advantages on charitable funds contributed to these accounts. Then they can decide later which charities to grant to. Funds may also be invested in the account and grow tax-free. When combined with a private foundation, DAFs can bring new capabilities to manage philanthropy most efficiently. Some example use cases are below: * **Meet client foundation distribution requirements.** DAF contributions can count toward your client foundation’s distribution requirement. * **Maximize income tax efficiency.** DAFs have higher Annual Gross Income deduction limits on your client's taxes. * **Simplify grantmaking.** Leverage built-in DAF grantmaking for small and international client grants. * **Have anonymity.** Grants from a DAF can be as private or public as desired. * **Collaborate with other funders.** Your client can combine funds with other grantmakers or invite the public to give alongside them in community DAFs. * **Preserve the public support test of nonprofit grantees.** A grant from a DAF may be a more favorable way for small charities to receive larger gifts * **Give grantmaking rights on specific funds to others, including children or grandchildren.** Invite your client to set up a DAF for someone else and that they can grant in their name. As a trusted stakeholder in your clients' financial journey, you have the power to invite your clients into a more diverse philanthropic life through the Foundation Source DAF giving program. ## Client-facing collateral We recommend leveraging this 3-Pager with clients as collateral to help you introduce them to the Foundation Source DAF giving program: {% file src="/files/lCul6rwgeHT4nO70NM9k" %} ## How to explain donor-advised funds to your clients {% embed url="" %} Though the Foundation Source DAF program has been designed with simplicity in mind, this may be the first time that some of your clients are encountering the concept of donor-advised funds. Generally speaking, though donor-advised funds are a powerful strategic giving tool, they can be challenging to describe. A donor-advised fund is a tax-deductible financial account for giving. Some phrases we like to use to help people understand them is: * *"It's like a 401k, but for giving"* * *"It's like a personal foundation, but without all the legal hassle"* {% hint style="success" %} **Wondering how to talk about DAFs without saying "DAFs"?** We recommend you initially explain the concept of donor-advised funds to your clients so that they understand the legal structure of their donor-advised fund account. However, for some clients, it may be beneficial to refer to their DAF as a "giving account". Throughout this guide, we will use "donor-advised fund" and "giving account" interchangeably. {% endhint %} ## Educational resources When approaching your clients with the Foundation Source DAF program, we recommend these [resources](/about-donor-advised-funds/daf-educational-resources.md) to help explain what donor-advised funds are and how they can help clients achieve their ambitions of generosity: * [Giving quiz](/about-donor-advised-funds/daf-educational-resources.md#educational-quiz) to connect your client's giving situation to the implementation of a donor-advised fund. * [Informational videos](/about-donor-advised-funds/daf-educational-resources.md#informational-videos) that break down complex aspects of donor-advised funds by topic. * [Learning center](/about-donor-advised-funds/daf-educational-resources.md#charityvest-learn-center) with collections of articles that detail best practices around purposeful giving. * [Definitive DAF Guide](/about-donor-advised-funds/daf-educational-resources.md#daf-guide) that offers a comprehensive explanation of donor-advised funds. {% hint style="info" %} **Curious to learn more about the Foundation Source DAF program?** Contact for any program or product-related matters. {% endhint %} --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://pcadafguide.foundationsource.com/about-donor-advised-funds.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.