Fund Comparison.

Donor Advised Funds (DAF) & Fiscal Sponsor Funds (FSF): The Similarities

Both DAFs and FSFs are Restricted Charitable Funds, meaning both must advance charitable purposes. Each is also considered a Time of Gift Deduction, in that the donor recognizes the charitable gift as a charitable contribution. DAFs and FSFs both also have a Fund Administrator—the sponsor—which assumes the legal, fiscal, and reporting obligations of the fund.

But that’s where the similarities end.

Donor Advised Funds have strict limitations leaving them in the dark, whereas Fiscal Sponsor Funds have less restrictions and more opportunities for philanthropists and their causes.

Donor Advised Funds Limitations

• Donors can’t raise funds

• Donors can’t make charitable contributions to foreign organizations

• Donors can’t give a charitable gift to an individual, such as a scholarship

• Donors can’t use funds to put on an event

• A DAF cannot pay its lawyers

• Self-dealing rules are onerous

• Some platforms are very limited on types of non-cash assets to receive

• Some platforms are very limited on types of investment

The Fund Administrator (sponsor) retains financial rights to direct the charitable disbursements and investment of the charitable funds (subject to Prudent Investment Rule)

Recommendations are made by either the donor for investment decisions, or by the Investment Manager who directs the investment of the funds.

DAFs can only disburse funds via US approved 501(c)(3) charities or Investment Managers.

*Philanthropic Impact Foundation is not an investment advisor or wealth manager and makes no recommendations concerning investment strategy.

Fiscal Sponsor Funds Opportunities

• If the donor would like to raise funds (from friends, other donors, or foundations)

• If the donor would like to disburse charitable funds to foreign organizations

• If the donor would like to gift individuals a charitable gift such as an educational scholarship

• Paying vendors if a donor would like to put on an event to advance their charitable purposes

• Paying its lawyers and other service providers

• Self-dealing rules are mitigated due to structure

• Fiscal Sponsorship platforms are pen when it comes to types of non-cash assets to receive

• Fiscal Sponsorship is open to investment platforms (as long as they comply with the Prudent Investment Rule)

• FSFs can continue generationally with a legacy plan

Tax Benefit Considerations

DAF donation limitations on AGI

• 60% on cash

• 30% on other assets

2020 FSF donation limitations on AGI

• 100% on cash