When advising clients on establishing a Donor-Advised Fund, financial advisors play a crucial role in ensuring that clients understand the implications, benefits, and responsibilities associated with this philanthropic vehicle. The following checklist is designed to guide financial advisors through the key considerations of Donor-Advised Funds:

Client Goals and Objectives

• Discuss the client's philanthropic goals and how a Donor-Advised Fund aligns with their long-term charitable giving plans.

• Evaluate the client's financial situation to determine the suitability of a Donor-Advised Fund in their overall estate and tax planning strategy.

Understanding Donor-Advised Funds

• Explain the concept, structure, and operation of Donor-Advised Funds, including the roles and responsibilities of the donor and the sponsoring organization.

• Clarify the tax benefits associated with contributing to a DAF, including deductions and the treatment of appreciated assets.

• Discuss the flexibility of Donor-Advised Fund's in terms of timing of contributions and grant recommendations.

Choosing a Sponsoring Organization

• Review different Donor-Advised Fund sponsoring organizations, considering their fees, investment options, grantmaking policies, and any specific focus areas or restrictions.

• Choose a Donor-Advised Fund sponsor that allows the Donor-Advised Fund to be managed as part of the clients’ broader portfolio

• Select a Donor-Advised Fund provider that can elevate the clients’ philanthropy by accepting a broad range of assets including private business interests, real estate and complex assets 

• Understand if the Donor-Advised Fund provider permits international grants as well as domestic grants

Contribution to the Donor-Advised Fund

• Discuss the types of assets that can be contributed to a Donor-Advised Fund (e.g., cash, stocks, real estate) and the tax implications of each.

• Review the process for transferring assets to the Donor-Advised Fund, including valuation requirements for non-cash assets.

• Explain the timing considerations for contributions, especially in relation to tax planning and deduction limits.

Grantmaking from the Donor-Advised Fund

• Outline the process for recommending grants from the Donor-Advised Fund to charitable organizations, including any restrictions or limitations imposed by the Donor-Advised Fund sponsor.

• Discuss the potential for anonymity in grantmaking and the implications for the client.

Succession Planning

• Review options for succession planning within the Donor-Advised Fund, including appointing successor advisors and the possibility of creating a legacy of charitable giving.

• Advise on the legal implications of succession planning within the context of the Donor-Advised Fund and the client's broader estate plan.

Monitoring and Reporting

• Explain the importance of monitoring the Donor-Advised Fund's investments and grantmaking activities, including any reporting requirements by the sponsoring organization.

• Discuss the role of the Donor-Advised Fund sponsor in providing tax receipts and other documentation for contributions to the Donor-Advised Fund.

Review and Update Estate Planning Documents

• Ensure that the client's estate planning documents, such as wills and trusts, reflect their intentions regarding the Donor-Advised Fund, including any bequests or designations related to the fund.

• Discuss how the Donor-Advised Fund fits into the overall estate plan and whether any adjustments are necessary to achieve the client's objectives.

Ongoing Review and Consultation

• Establish a schedule for regular reviews of the client's Donor-Advised Fund strategy in the context of their changing financial situation, tax laws, and philanthropic interests.

• Encourage open communication with the client to address any new concerns or opportunities related to their Donor-Advised Fund.