{"id":15428,"date":"2025-10-09T18:01:37","date_gmt":"2025-10-10T01:01:37","guid":{"rendered":"https:\/\/familyenterpriseusa.com\/?p=15428"},"modified":"2025-10-09T18:04:12","modified_gmt":"2025-10-10T01:04:12","slug":"charitable-giving-dafs-vs-private-foundations","status":"publish","type":"post","link":"https:\/\/familyenterpriseusa.com\/feusa\/charitable-giving-dafs-vs-private-foundations\/","title":{"rendered":"Charitable Giving: DAFs vs. Private Foundations"},"content":{"rendered":"

[et_pb_section fb_built=”1″ _builder_version=”4.16″ custom_padding=”22px|||||” global_colors_info=”{}”][et_pb_row admin_label=”CTA” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” collapsed=”on” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_divider color=”#397389″ divider_weight=”2px” _builder_version=”4.19.4″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_divider][et_pb_cta title=”The data is in! See what family owned businesses are saying about today\u2019s challenges and opportunities.” button_url=”https:\/\/familyenterpriseusa.com\/family-business-survey\/” button_text=”Read the 2025 Annual Survey Executive Survey now! Click here.” disabled_on=”off|off|off” admin_label=”Call To Action Top” _builder_version=”4.27.4″ _module_preset=”default” header_font_size=”22px” background_color=”#397389″ custom_button=”on” button_bg_color=”#ff0019″ custom_margin=”-17px|||||” custom_padding=”16px||19px|||” global_module=”9695″ saved_tabs=”all” global_colors_info=”{}”][\/et_pb_cta][et_pb_divider color=”#397389″ divider_weight=”2px” _builder_version=”4.19.4″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_divider][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_5,3_5,1_5″ admin_label=”Author Byline” _builder_version=”4.24.3″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” link_option_url=”https:\/\/www.brownandstreza.com\/davidkeligian” link_option_url_new_window=”on” collapsed=”on” global_colors_info=”{}”][et_pb_column type=”1_5″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_image src=”https:\/\/familyenterpriseusa.com\/wp-content\/uploads\/2025\/10\/Zoom-Speakers-Ashley-Fontanetta.jpg” alt=”Ashley Fontanetta” title_text=”Ashley Fontanetta” _builder_version=”4.27.4″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][et_pb_column type=”3_5″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Author” _builder_version=”4.27.4″ text_font=”||||||||” text_font_size=”16px” background_size=”initial” background_position=”top_left” background_repeat=”repeat” link_option_url=”https:\/\/www.whittiertrust.com\/staff-member\/ashley-fontanetta\/” link_option_url_new_window=”on” global_colors_info=”{}”]<\/p>\n

By Ashley Fontanetta
<\/strong>Senior Vice President and Client Advisor<\/em>
Whittier Trust<\/p>\n

[\/et_pb_text][\/et_pb_column][et_pb_column type=”1_5″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” collapsed=”off” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”1″ _builder_version=”4.27.4″ text_font=”||||||||” text_font_size=”16px” background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n

\u201cWhen I speak with a client about charitable giving, the most common question is whether they should create a private foundation or use a donor-advised fund,\u201d says Ashley Fontanetta, Senior Vice President, Client Advisor at Whittier Trust. \u201cUnfortunately, there\u2019s no quick and easy answer except this: It depends on your priorities.\u201d<\/strong><\/h2>\n

 <\/p>\n

A simple conversation with the Whittier Trust Philanthropic Services Team can help a client get to the heart of those priorities. Our advisors might begin, for example, by asking who will be involved in your charitable giving and in what capacity. They\u2019ll need to know what types of assets are being used to fund the entity and in what amount. And they\u2019ll want to discuss how much importance you place on control.<\/strong><\/em><\/h3>\n

 <\/p>\n

The answers to these and related questions will typically point to which charitable structure is the best fit for a client. But first, let\u2019s make sure everyone understands the essential differences between DAFs and private foundations.<\/p>\n

PRIVATE FOUNDATIONS<\/strong><\/p>\n

\u201cPrivate foundations are often the go-to choice because they are the best-known option,\u201d says Fontanetta.\u201cBut that doesn\u2019t necessarily make them the right choice for you.\u201d Charitable foundations are governed by legal rules that are too restrictive or cumbersome for some clients. The key rule is that a private, non-operating foundation has the legal obligation to distribute no less than 5% of its average asset value to qualified charities each year. So, to give a simplified example, if your family created a private foundation that averaged total assets of $10 million, you would be obligated to distribute $500,000 per year for charitable purposes.<\/p>\n

Private foundations can be created as a corporation or a charitable trust. They are often governed by a board of Directors or Trustees and can either be set up to last in perpetuity, or to sunset and By Ashley Fontanetta, Senior Vice President, Client Advisor, Whittier Trust shut down after a certain period of time. \u201cOne of the unique advantages of private foundations is that they can pay for expenses related to their charitable purpose,\u201d Fontanetta adds. \u201cFor example, family members might travel to visit a grantee for a site visit or attend a conference to learn about an issue area. The foundation can even pay stipends or salaries for people who serve as board members or staff. In contrast, donor-advised funds cannot be used for any such expenses.\u201d<\/p>\n

DONOR ADVISED FUNDS<\/strong><\/p>\n

A donor-advised fund, or DAF (pronounced as a word, daf, not the initials D-A-F) is like a checking account for charitable giving, Fontanetta explains. \u201cOnce a donor places money into the DAF, they receive an immediate charitable deduction for the contribution. After that, the donor can advise (request) charitable distributions to be made to any 501(c)(3) public charity in good standing.\u201d<\/p>\n

Much like a checking account is held at a banking institution, DAFs are held at a sponsoring organization, such as a community foundation, financial institution, or large nonprofit. A key difference, however, is that as soon as funds are placed into a DAF, the sponsoring organization owns those assets. The sponsor might have certain rules about how they operate their DAFs, but generally, they allow for the donor and any other individuals named by the donor to advise as to where charitable distributions should be made. This is an important distinction: Since the money in the DAF technically no longer belongs to the donor, they are not directing grants, simply advising as to who the charitable recipients should be. Sponsoring organizations differ in the ways they handle investments, succession, and acceptance of certain assets, so it\u2019s very important to interview sponsoring organizations before deciding where to open your DAF.<\/p>\n

BEST FIT<\/strong><\/p>\n

Returning to the original question\u2014private foundation or DAF\u2014we hope you might now be seeing some distinctions that might make the answer more readily apparent for you.<\/p>\n

\u201cThe best piece of advice I can give is don\u2019t go it alone,\u201d says Fontanetta. \u201cThere are multiple resources and forums for philanthropy to help guide your journey, whether you\u2019re considering a private foundation or a donor-advised fund. Of course, the credentialed professionals on our team at Whittier Trust are always at your service.\u201d<\/p>\n

Over the last four decades, Whittier Trust has advised several generations of affluent families on their philanthropic choices. Philanthropy is a key component in the overall financial management and estate planning services hittier provides and can also be a cornerstone of your family\u2019s personal relationships and legacy.<\/p>\n

Additional references:<\/strong><\/p>\n