What happens to my Donor Advised Fund (DAF) when I’m gone?

Creating a succession plan for your DAF is an important decision to make.

Are you one of the thoughtful and generous people who have discovered the power of a donor advised fund (DAF)? They are an excellent tool to streamline and simplify charitable giving. If you have a DAF, have you ever wondered what happens if there is a balance in your fund at the end of your lifetime? Where will that money go? Who decides how the money is used?

Once the DAF account owner has passed away and can no longer “advise” how their donor advised fund supports charities, the DAF could become an “orphaned donor advised fund.” Essentially, orphaned donor advised funds become unrestricted assets of the sponsoring organization. While the DAF sponsor must use it for charitable purposes, the sponsoring organization can choose what areas to support.

Exactly how orphaned donor advised funds are used depends upon policies of the sponsoring organization. Many of the national DAF programs sponsored by financial services firms have grantmaking programs to ensure distribution of orphaned donor advised funds, while others maintain a list of favored organizations to receive distributions.

You’ve worked hard to establish your charitable legacy. Make sure remaining funds in your DAF are passed on to benefit the causes you care about most by nominating an individual, a charity, or a combination of both as the successor for your DAF. Check with your DAF sponsor to learn about your options. Depending upon their policies, you may be able to:

• Name one or more successor advisors for your DAF.
• Distribute your DAF to one or more new donor advised funds.
• Provide a standing recommendation for final grants to one or more charitable organizations like California Waterfowl to zero out the fund balance.
• Establish a program of recurring grants, much like an endowment.
• Transfer the DAF assets to a “field of interest fund” from which the sponsoring organization can make grants within broad categories.