Private foundations vs. donor-advised funds – what’s a DAF anyway?

Safia Hussain of Asbahi Law Group posted an informative essay at Nonprofit Legal Blog recently about choosing between private foundations and donor-advised funds (DAFs) as a giving vehicle.

Donor-advised funds are an increasingly popular way to create a grant-making vehicle for charitable giving.  Donors establish a small fund (generally upward of $5,000) with a community foundation or the charitable arm of an established investment company, like the Fidelity Charitable Gift Fund. Donors get an immediate tax deduction for giving to their DAF but can award grants (generally a minimum of $50-$100 each) over a longer period of time.  Safia has more at her post comparing the two.

It’s worth noting that donors contributed more than $1.1 billion in 2009 to Giving Accounts at Fidelity Charitable Gift Fund, up from $1.05 billion in 2008 – despite the financial downturn.  Donors also recommended more than $1 billion in grants to more than 60,000 charities.

Do any of you have experience with DAFs?