A donor-advised fund allows clients to support qualified charities and non-profit organizations, both now and in the future, through a charitable investment account, conferring immediate tax benefits. When opening a donor-advised fund, the donor irrevocably transfers assets (cash, publicly traded securities, restricted stock, or even complex, non-traded private business interests) to the respective donor-advised fund sponsor.
These tax-exempt, split-interest trusts generate a periodic income stream of at least 5% annually for a beneficiary, typically the donor, through irrevocably donated assets. After the predetermined length (at maximum, 20 years) or the donor's death, a charitable organization receives the remaining funds. The two most common types of charitable remainder trusts are: