Donor-Advised Fund FAQs
If you have a question that isn’t covered in the sections below, please contact us at (888) 878-7900.
Opening a Donor-Advised Fund Account
All contributions to a donor-advised fund are irrevocable, and cannot be withdrawn by the donor. Following donation, assets contributed to a DAF are solely owned by the sponsoring organization. Donors retain advisory privileges over the assets in the DAF account, and can recommend an investment strategy as well as where the funds can be sent for grantmaking purposes. The sponsoring organization has a legal responsibility to ensure that DAF assets are used for charitable purposes only, and will work to honor the donor’s intent as closely as possible.
A donor-advised fund (DAF) is designed to be used at any time, at any stage of a donor’s philanthropic journey. With a DAF, a donor can make contributions at any time that makes sense for them, then recommend grants at any time in the future. Many donors find DAFs especially useful for streamlining their giving during periods of increased charitable activity, such as year-end, when many nonprofit organizations are fundraising to meet year-end goals. If a donor tends to give to several organizations during this time, a DAF allows them to recommend grants to each qualified organization while only having to track gift receipts for contributions into the DAF.
Individuals, families, companies, foundations and other entities can start a donor-advised fund account.
To start a donor-advised fund account with NPT, you will need to make a contribution of $10,000 or more. Once your account is established, you can make subsequent contributions in any amount at any time.
Yes. You can choose any name for your donor-advised fund account. You can use the term Foundation in its name. Most donors choose a name that reflects the main purpose of the account, such as “The Smith Educational Fund.” Some donors select a name that helps them to remain anonymous, like the “Emerging Scholars Fund.”
At NPT, it takes less than a day. Once you submit a completed Donor Application, your account is established and ready to receive contributions.
Managing a Donor-Advised Fund Account
Donor-advised funds (DAF) offer the most advantageous tax benefits of any charitable vehicle. While there are many ways to use a DAF, donors often find that it is tax-efficient to contribute appreciated securities to fund the DAF account. This helps donors avoid capital gains tax, increase their income tax deduction, and preserve more asset value for future grantmaking.
Yes. You can name them as advisors or successor advisors to your account. They can legally assume these roles as soon as they are 18 years old.
NPT also offers the opportunity to discuss family philanthropy, and can offer guidance on developing a family giving strategy. To speak with a member of the Philanthropic Services team, please call (888) 878-7900.
Yes. If you name more than one successor advisor, your account assets will be split into separate new accounts for each successor advisor that you have designated. Each successor will have advisory responsibilities on one of these new accounts created from your DAF account assets.
Your named successor advisors will have advisory privileges on accounts that are created out of your account assets. Those successor advisors can, in turn, name their own successor advisors who will succeed on accounts created out of those assets, and so on.
At NPT, you can choose an investment strategy from a variety of best-in-class options. If you contribute $500,000 or more, you and your advisor(s) can create a customized investment plan, subject to NPT approval.
NPT charges charitable administration fees. These fees cover grantmaking, recordkeeping, annual audits, tax filing, quarterly statements, insurance and various other operating expenses. NPT determines the amount of these fees by applying a blended schedule against the average daily balance of your account at the end of each month. Other fees include, but are not limited to: fees for grant agreements or international grants recommended by the donor; illiquid gift processing fees; and (for some DAF accounts) a fee to financial advisors.
You can designate one or more charitable organizations as account beneficiaries. If you indicate neither charitable beneficiaries nor successor advisors to your donor-advised fund account, NPT can annually distribute 5% of your account’s balance to the charitable organizations that have previously received grants. If you have not recommended grants, the donor-advised fund account’s entire balance will be transferred to the NPT Giving Fund.
Yes. NPT’s Philanthropic Services team can offer guidance in creating a philanthropic strategy for new donors, and can support experienced philanthropists in developing a plan to take their philanthropy to the next level. NPT provides you with the support you need to achieve your charitable vision. To speak with a member of the Philanthropic Services team, please call (888) 878-7900.
Contributable Assets and Definitions
Yes. Once established, a donor-advised fund can be listed as the beneficiary of a trust. This may be an attractive option for estate planning, because it shifts the administrative responsibility from the executor of the trust to the DAF sponsor.
NPT accepts the widest range of assets — including non-cash contributions — of any charitable organization. These include:
- Cash
- Publicly traded securities including stocks, bonds, mutual fund shares
- Restricted and controlled stock
- Privately-held stock
- Real estate
- Proceeds from life insurance or from a full-paid policy
- Private foundation grants or terminations
- Bequests and Testamentary Gifts
- Remainder interest from a charitable remainder trust
- IRA, 401(k), or other retirement account assets
- Tangible personal property
- Cryptocurrency
NPT strongly encourages you to consult with your tax advisor or attorney before making a charitable contribution.
For more information, visit our Contribution Guide for Donor-Advised Funds page.
A contribution becomes a donation when the asset is out of the donor’s control. This is determined by the type of asset you contribute, as well as when and how it is transferred to your NPT donor-advised fund account.
You may name your donor-advised fund as the charitable beneficiary of all or part of your IRA distributions. You should consult with your tax advisor or attorney to determine how this affects your tax liability and filing needs.
The most common and cost-effective contributions are appreciated securities that you have owned for more than one year. You avoid any capital gains tax on the securities and you can deduct the total fair market value of the contribution from your federal income taxes, and up to 30% of your adjusted gross income.
Contribution Amounts and Frequency
You may contribute $5,000 or more at any time. Many donors like to add to their donor-advised fund accounts immediately after they recommend a grant in order to replenish their available grantmaking funds. Others prefer to make regular contributions and build up the account for larger-scale, future grantmaking.
For more information, visit our Contribution Guide for Donor-Advised Funds page.
Yes. All contributions to your donor-advised fund are donations to a public charity, and therefore tax-deductible.
Contribution Management and Reporting
Yes. NPT provides you with a written confirmation of your contribution(s). This confirmation serves as a receipt for tax purposes. With a donor-advised fund account, you can claim a charitable contribution deduction for your contribution. Because you may take a tax deduction for your contribution to the DAF, grants you recommend from your DAF account cannot be used to take a tax deduction. Additionally, income accrued in your DAF account from positive investment performance is not eligible for deduction.
We invest it according to your recommendations. If your contribution is liquid, we invest it on the same business day that we receive it. A business day is defined by the NYSE. If your contribution is illiquid, we invest it on the same business day that we receive proceeds from its sale. We are committed to selling illiquid assets in a responsible and timely fashion.
Tax Deductions
Under the Internal Revenue Code, deductions for charitable contributions are subject to certain percentage limitations. You can deduct a stated percentage of your adjusted gross income (AGI) in the year you take the deduction. Contributions in excess of these percentage limitations may be carried forward for additional years.
National Philanthropic Trust is a public charity. Therefore, percentage limitations that apply are the most favorable charitable deductions available. Deductions for contributions of long-term capital gain property—such as appreciated securities held for more than one year—are limited to 30% of AGI. Deductions for cash contributions may be taken up to 60% of AGI. Your ability to take itemized deductions may be subject to certain other limitations. Please contact your tax advisor to evaluate your tax deductibility limits.
Visit our Tax Advantages page for more information.
No. Only contributions to NPT are tax-deductible. Growth inside your donor-advised fund account is not eligible for additional deduction.
Yes. Here are some general guidelines:
- Check/wire: Your charitable deduction is the amount of your cash contribution.
- Publicly-traded securities: If you have owned your securities for more than one year, your gift value is the fair market value of those securities donated, determined by an average of high and low on the date you contribute them.
- Securities that are not publicly traded: If you have owned your securities for more than one year, your gift value is the fair market value of those securities donated, determined by you in a reasonable manner on the date you contribute them. The IRS may require you to obtain a qualified independent appraisal.
- Real Estate: For real estate contributions, your gift value is the fair market value of that real estate, determined by you in a reasonable manner on the date you contribute it. The IRS may require you to obtain a qualified independent appraisal.
Tax Liability and Filing
This difference is due to market fluctuations and liquidation costs. NPT asks that you consult your tax advisor to determine your charitable tax deduction.
No. The IRS requires that you have in your possession a copy of the contribution receipt at the time you file your taxes.
Since NPT is a charity, we do not pay a capital gains tax when we sell gifted securities. Therefore, you pay no capital gains tax on securities you contribute to your donor-advised fund account.
Grantmaking Guidelines and Definitions
Donor-advised funds (DAFs) are under no legal requirement to meet an annual payout rate. This differentiates them from private foundations, which are required to distribute 5% of the fair market value of their assets each year to avoid excise taxes. However, NPT does have a Minimum Account Activity Policy, which requires donors to make at least one $250 grant to a qualified charity every 36 months.
No. The most common reason for denying a grant is a donor’s desire to use that grant for table sponsorship or event tickets. Charitable events and galas typically provide their attendees with benefits that aren’t tax-deductible, such as food, drinks and/or door prizes. Donor-advised fund grants cannot be used to pay any portion of the ticket to attend an event if the full cost is not tax-deductible.
For more information, visit our Grantmaking Rules page.
NPT cannot make grants to private non-operating foundations or to individuals. Grants cannot be made to political candidates or parties. Grants cannot be used for any personal benefit, such as tuition, dues, membership fees or any goods purchased at a charitable auction.
Visit our Grants in Action series for a wide range of example organizations that are eligible to receive grants through a donor-advised fund.
NPT’s team of philanthropic experts can offer advisory support to help you define your charitable strategy. In addition to our internal expertise, our team collaborates with a national network of philanthropic advisors with deep experience in specific geographies. To speak with a member of the Philanthropic Services team, please call (888) 878-7900.
Visit our Tips for Charitable Giving page for more information.
NPT is one of the few donor-advised fund sponsors that makes international and non-501(c)(3) grants. These grants require additional due diligence to determine if the charity is eligible. International grant eligibility is determined through Expenditure Responsibility and Equivalency Determination, and such grants require additional monitoring. As a result, NPT charges additional fees which are charged to your donor-advised fund account when you recommend a grant of this type.
For more information on recommending grants to international organizations, please visit our International Grantmaking page.
NPT can make grants to charitable organizations that are tax-exempt under Internal Revenue Code (IRC) Section 501(c)(3) and public charities under IRC Section 509(a). NPT can also make grants to certain private operating foundations. NPT cannot make grants to private non-operating foundations. If you have a special grant request, please contact a member of NPT’s staff at (888) 878-7900.
Yes. Any individual grant can be given out anonymously, or with a reference to the DAF, or to you as the donor. You may also recommend a grant in someone’s honor or memory.
Yes. Please check the policies of your company.
Grant Amounts and Frequency
There is no limit to the number of grants you can recommend in a year.
NPT’s minimum grant is $250.
Grant Fees and Processing
NPT’s grants are processed weekly.
NPT does not charge a per-grant fee. NPT does charge additional fees for international and non-501(c)(3) grants.
About Impact Investing
Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Generally speaking, there is an expectation that the invested capital will be returned in addition to a financial return to compensate the investor – or in the case of NPT donors, to grow the DAF assets available for grantmaking. The range of expected financial returns depends on several factors including asset type, risk, targeted social and environmental outcomes, etc. As with any investment, there is a risk that capital will not be returned.
For more information, visit our Impact Investing page.
Charitable grants differ from impact investments in that they are distributions out of your DAF to qualified charities, with no expectation of principal return.
Impact investing can be achieved through many different investment vehicles, including both public and private investments. Some examples of impact investing approaches include:
For public investments
- Using negative screening – avoiding investments in specific industries that the investor views as causing harm, such as fossil fuels or weapons.
- Using positive screening – incorporating Environmental, Social and Governance (ESG) criteria into investment decision-making.
For private investments
- Investing in private funds with an investment thesis focused on companies improving the lives of people in their communities and beyond.
- Investing directly in companies, nonprofits and organizations with missions and business activities that drive solutions to social and environmental challenges.
For additional impact strategies, visit our DAF Impact Strategies page.
One advantage of DAFs is that they give you the ability to take a long-term, holistic view of your philanthropy. By aligning investable assets – i.e. those not yet allocated for specific grants – with your philanthropic goals, DAFs are positioned to create catalytic change even before the first dollar is donated. Impact investments that align with your vision of positive social and environmental change can supply critical capital to organizations.
A benefit of impact investments is that there is generally an expectation that invested capital will be returned in addition to a financial return to compensate the investor. By recommending impact investments for your DAF, you can amplify your giving by recommending the reinvestment of the return of principal into future impact investments or by recommending charitable grants.
About CapShift
CapShift is a mission-driven company that empowers philanthropic and financial institutions, along with their clients, to mobilize capital for social and environmental change.
CapShift provides due diligence and sourcing capabilities to expand investment options for donors with NPT donor-advised funds. CapShift provides NPT with thematic impact investment portfolios and a curated menu of private impact investments. Additionally, CapShift performs due diligence review on impact investments recommended by donors and provides advisory services for donors upon request.
If you already have an account with CapShift, you can log in here. To request access to the CapShift platform, please click here to complete a questionnaire so that NPT can assist you.
If your DAF has a balance of $500,000 or more, NPT can engage Capshift to review impact investment opportunities that are not already approved on their platform. CapShift will conduct due diligence on the investment opportunity and report its findings to NPT. NPT retains discretion of and control over DAF assets and must approve the investment recommendation. NPT’s Investment Committee will review your recommendation against NPT’s Investment Policy Guidelines and, if approved, the investment may be made through your DAF.
Impact Portfolios
Similar to other investment portfolios available for an NPT DAF, an impact portfolio includes a mix of actively and passively managed mutual funds, ETFs, fixed income funds and cash holdings. The holdings in each of the impact portfolios address a specific theme: Gender Lens, Equity and Inclusion, Environmental Stewardship or Broad Impact. NPT crafted these portfolios to align with many donors’ values and charitable goals, with recognition that our donors represent a wide spectrum of philanthropic ideals.
As with other DAF investment options that NPT offers, the impact portfolios aggregate investments from individual DAFs into one central investment vehicle, which in turn purchases the portfolio investments. Individual DAFs contribute cash and receive units in the portfolio of equal value. The value of the units will fluctuate based on changes in the values of the underlying portfolio holdings.
The portfolios seek market rate returns through a combination of active fund managers looking to beat their benchmarks and passive funds looking to track their benchmarks at a low cost. The impact portfolios seek a similar diversification and risk profile as other NPT portfolios.
There are always risks associated with investing in securities. Investment in NPT’s impact portfolios involves risk of loss of principal and risk of decline in market value, and NPT makes no guarantees regarding expected market performance. Just like any investment portfolio, the value of the impact portfolios will fluctuate with the broader equity and fixed income markets.
Three of the portfolios – Environmental Stewardship, Gender Lens, and Equity and Inclusion – are designed for donors with a moderate risk tolerance. These portfolios offer the liquidity of public markets but may be subject to market volatility in the near-term. These portfolios would not be appropriate for the investment of DAF funds that a donor is considering recommending as grants from their DAF in the next 1-3 months, but rather for the portion that is not intended for near-term grantmaking.
The Broad Social Impact portfolio, which includes private investments, is targeted for donors with an aggressive risk tolerance, and thus a longer investment horizon.
Yes, the portfolios include investment products that can be sold to raise cash for grantmaking purposes, similar to other NPT model portfolio options. If a donor wishes to recommend a grant from a donor-advised fund and the grant is approved, NPT will sell units in the impact portfolios held in the DAF to raise cash to fulfill the grant. The remaining ungranted DAF funds continue to be invested in the portfolio.
Yes, you can recommend an allocation of your donor-advised fund assets into multiple portfolios, including both impact and traditional model portfolios. In fact, if you intend to recommend a grant in the next 12 months that represents a significant portion of your DAF, you may not want to include this capital in your allocation to the impact portfolios.
Customized Impact Investing
The CapShift menu offers a curated list of private equity, venture capital, real asset, loan funds and private credit funds. In addition, you may recommend an investment directly into a social enterprise. NPT will engage Capshift to perform due diligence to ensure that the investment is appropriate for a DAF and to satisfy its fiduciary responsibilities. The cost of this operational due diligence is the donor’s obligation. NPT retains discretion and control the DAF assets and must approve the investment recommendation.
Learn more about customized impact investing and NPT’s thematic impact portfolios.
Investments in NPT’s curated menu of investment opportunities incur a processing fee to cover the document submission on behalf of NPT and the cost of maintaining the program. For impact investments not on the menu, there is a diligence fee to cover the cost of performing operational due diligence on the fund to ensure it is suitable for NPT as well as the processing of the investment.
