This step-by-step process is the easiest way to describe how DAFs work.
1. You identify the donor-advised fund you would like to use (as you can see below, there are many from which to choose).
2. You select your fund advisor(s), potential successors, and public charity beneficiaries.
3. You make contributions to the donor-advised fund in the form of cash, securities, real estate, or other assets of value.
4. Your fund contributions become eligible for investment where they can grow tax-free.
5. You claim the entire tax benefit/deduction in the immediate year of your contribution.
6. You make grant-giving recommendations from the DAF account to IRS-approved charities.
It is important to note that all fund contributions are irrevocable. Once placed in the fund and claimed for tax purposes, they must be granted at some point to a nonprofit organization.