How to Look Beyond Giving Tuesday to Build A Legacy of Giving
A simple and sustainable way to establish multi-generational philanthropy
(Initially published on Medium.com, 06-Nov-2025. Feature photo by Vitaly Gariev on Unsplash)
Rethinking charitable giving
Okay, here we are in November and it’s the time of year folks start to think about their charitable donations before the end of the year.
Remember: For 2025, Giving Tuesday is 02-December.
It can feel good to give money to those in need; to know you’re giving back and helping a cause achieve their goals. But does your family have an intentional strategy with charitable donations?
My wife and I used to give to charities in an ad hoc manner. We didn’t have a strategy or goal; we just donated when we heard of an organization or need that we wanted to support.
Besides lacking direction or intention, the downside was that our contact details were shared with other charities and it became frustrating to constantly get mail asking for money from entities we weren’t interested in supporting.
Our intentions were good, but it wasn’t strategic until we discovered Donor-Advised Funds (DAF’s).
Here’s some information so you might consider selecting a Donor-Advised Fund, too.
What’s a Donor-Advised Fund (DAF)?
A quick layman’s explanation: a DAF is a charitable investment account (typically a 501(c)(3) under IRS tax code) managed by a larger financial institution.
You open an account within the institution’s DAF and donate cash, appreciated securities or other assets to the account.
At the time of donation, you receive the tax deduction (as applicable for your personal tax circumstances) because it’s a 501(c)(3) charity.
The DAF now owns and controls the funds.
These funds are allocated to your DAF account. From these funds, you can recommend grants to qualified charities.
Much like your employer’s 401k program, the DAF will have a selection of investment options so the assets can grow until you recommend grants. All asset growth is tax-free.
A quick example:
You donated $5000 to the DAF in 2022. You selected to have it invested in a mix of index funds for the S&P 500, NASDAQ and Dow Jones. Today, it’s grown to $6,300 and will keep growing.
This year, you make a one-time grant recommendation to your favorite charity of $2000. You also decide to establish a recurring grant recommendation to your local food bank for $50 per month. This will continue for as long as your DAF account has sufficient funds.
Your charities receive the money and you established a longer term giving strategy.
Any tax deduction for you was received in 2022 when you donated the $5000, so there’s no tax return paperwork to address today.
To increase the DAF account’s longevity and enable supporting more charities, you decide to donate $1000 per year — and those donations will be tax deductible (as applicable) in the year you donate them.
There are more rules and details, but that’s the 30 second elevator ride summary. Keep reading for more details.
Choosing a DAF provider
There are many institutions that manage Donor-Advised Funds. From a quick internet search, here’s a list of some options:
- Fidelity Charitable Trust
- Vanguard Charitable
- Schwab Charitable
- National Philanthropic Trust
- American Endowment Foundation (AEF)
- BNY Mellon Charitable Gift Fund
- Community foundations (such as Silicon Valley Community Foundation or Greater Houston Community Foundation) that provide locally focused DAF options.
Quick disclaimer: I have not vetted the above institutions. My wife and I do use one of the above, but I’d rather not say which one to avoid implying preferences over the others. I recommend starting with asking your existing financial institution after doing your own research.
There will be different aspects to consider when selecting a financial institution for a Donor-Advised Fund, such as minimum amounts to open an account, fees, investment options, financial stability of the institution, possible restrictions on charities, and any efficiencies you may see by having your various accounts consolidated to a financial institution you already use.
Pros and cons summary
Here are a few pro’s and con’s when considering a Donor-Advised Fund.
I recommend you review these and any other questions you have with your financial advisor when considering a DAF.
Pros
- Charity vetting: The DAF will only permit grants to established charities under IRS rules and it can provide tools to assess the charity. It’s a great double check to confirm the charity’s management team stewardship and effectiveness in their programs.
- Immediate tax deduction (as applicable) in the year you contribute to the fund.
- Tax-efficient donation strategy: you can donate appreciated assets directly and avoid capital gains taxes while still deducting the fair market value.
- Investment growth: Your contributions can be invested for tax-free growth, increasing the asset value available for donations in the future.
- Convenience: You can manage all your charitable donations via the DAF and avoid tracking donation receipts. The financial institution is handling all the accounting paperwork, issuing funds, etc.
- Timing flexibility: Using the DAF separates the timing for when you make the tax deductible donation and the philanthropic decision of where to give.
- Privacy: You get to decide how much information the receiving charity will receive about you. You can be anonymous, share your account name (e.g., ‘XYZ Family Fund’, or whatever you name it), share your account name and address, or other level as determined by your DAF financial institution. I love this feature. We prefer to remain anonymous. We don’t want their swag bag or other donation trinket they want to send you as a thank you gift. We are good with that; we want the money to help them, not the recognition for ourselves. Only in a few instances do we discuss the donation with the charity and that typically is if the charity doesn’t accept EFT payments and a paper check is mailed to confirm receipt or perhaps if we have more personal connections to the charity. In all instances, we insist on remaining anonymous without any public listing of our names.
- Legacy and family involvement: You name successors and others authorized to make grant recommendations to support family tradition of giving back and teaching your late-teen / adult children the importance of supporting community. With funds remaining, the account will remain for their future grant recommendations.
Cons
- Irrevocable contributions: The funds are no longer yours. I didn’t this was a con until a friend said, “Yeah, but you can’t take the money back.” — I was floored; how many charitable contributions do you make and consider taking the money back — that’s bizarre, but it was his view.
- Admin costs: The financial institution will charge fees to manage the account and process. For accounts with smaller balances, this may be more notable.
- Potential delayed donation impact: If you donate with intention to let the funds grow before making a grant recommendation, those are fund that arguably could have benefited a charity sooner. That is a key consideration in your grant recommendation strategy. My wife and I liked the idea of letting the fund grow sufficiently to enable making continual donations based on the fund’s growth and the new contributions we make each year. You can still make contributions for immediate charity grants, if you prefer.
- You make recommendations, not charity donations: You do not control the DAF funds; the financial institution does. So, while you recommend charities to receive a grant, the DAF has ultimate decision authority on the donation. In my experience, all of our grant recommendations have been approved as we recommend established charities. I suppose if there is a new or perhaps smaller charity that the DAF financial institution may not accept your grant recommendation; we haven’t had that experience.
- Slightly removed from charity direct contact: If you only use the DAF to manage your donations, you’ll be removed from charity contact unless you initiate it or share your name with them as part of the grant process.
Create a family giving plan
We established our Donor-Advised Fund account after our kids were born. Having kids helped us think bigger than ourselves and how we can hopefully make the world a better place.
If you want to create your family giving plan, here’s some recommendations to address:
- Define your goals, based on your values. Identify the causes you hold dear and want to support.
- Define your annual contribution goals. This can be focused on a percentage of your income, DAF account balance goals, being strategic about donating portions of appreciated investments in taxable accounts, or perhaps a combination of all these ideas.
- Identify your successors (and alternate successors).
- Involve your family (to the degree that’s appropriate for their age) when making grant recommendations. Involve your successors if different from your family.
- Consider periodic family meetings to discuss your donations, impact you want to make, new opportunities, and your near-term and long-term goals.
Establishing a sustainable giving legacy
One of the greatest benefits for my family is that we are working towards establishing a sustainable giving legacy. We want our DAF account to reach an asset balance such that it can remain funded and grow, even as we make grant recommendations to charities close to our hearts.
To do this, you need to plan longer term. Consider:
- Year 1: Establishing your account, making first contributions, make your giving plan.
- Years 2–3: Start making additional annual contributions. Start making your grant recommendations, track your fund’s investment returns. Manage the money similar to your retirement accounts like a 401k or IRA.
- Years 4–5: Look ahead to your goals for year 10 and make plans (donations and contributions) to create a perpetual philanthropic cycle and instill these values into your children and successors.
Tips to maximize impact
Here are a few tips to help you make the most of using a Donor-Advised Fund in your charitable giving strategy.
- Donate appreciated assets, instead of cash. Coordinate with your tax advisor and financial planner to ensure you’re making the right decisions.
- Diversify your DAF account investments for growth with consideration for your grant strategy — much like you would a retirement account withdrawal plan. Keep the funds intended for near-term grant recommendations in more conservative investments (e.g., cash account or money market).
- Establish recurring grant recommendations in a sustainable manner (amounts and frequency). This will help charities get steady support. My family uses a mixture of monthly, quarterly and annual recurring grant recommendations, depending on the charity.
- Your DAF account is not just for long-term mission, but can be used for any new charity or donation you want to make today. Route the funds via the DAF account to remain anonymous and the ease of managing your financial accounts.
Conclusions
A Donor-Advised Fund (DAF) isn’t just about a conduit to route your charitable contributions.
It is a fantastic way to establish charitable giving as a legacy in your family.
You get convenience and tax benefits in the near-term, but the long-term sustainable growth enables you to fulfill your family’s giving plan with intention and purpose.
Overall, start small and in a sustainable manner. I think the pro’s outweigh the con’s. It was the right decision for my family. It’s great to know you’re helping charities and important causes while you create something for your children and grandchildren to continue.
Enjoy Life and Thanks for Reading,
-Jeff
