❓ What is a Donor Advised Fund (DAF)? How does it work? And why is it used for fiscal sponsorships?

A Donor Advised Fund (DAF) is a giving account established at a public charity that allows donors to contribute money, receive an immediate tax deduction, and then recommend how those funds should be distributed over time to support charitable causes.

💡 How does a Donor Advised Fund work?

Think of a DAF like a charitable bank account:

1. A donor makes a contribution to the DAF sponsor (like Pure Charity).
2. The donor gets an immediate tax deduction for the full amount.
3. The funds are placed in a DAF—a fund set aside for charitable purposes—and remain under the legal control of the sponsor (i.e. Pure Charity).
4. Over time, the fund advisor can recommend grants or disbursements to qualified charitable activities or nonprofit partners.

Although the sponsor (like Pure Charity) legally owns and manages the funds, the fund advisor (Community Organizer) plays a key role in directing how the money is used to support specific projects, organizations, or causes that meet IRS charitable criteria.

🧰 Why is a DAF used for fiscal sponsorships?

At Pure Charity, we use a DAF-based model to structure fiscal sponsorships. This is a powerful and flexible way to support community-led work while ensuring transparency, compliance, and donor confidence. Here’s how it helps:

1. Charitable Oversight & Compliance

Because the DAF is owned and managed by a 501(c)(3), it ensures all funds are used in accordance with IRS regulations—supporting only charitable purposes. This keeps your project compliant without requiring you to form your own nonprofit.

2. Flexibility for Organizers

The DAF structure allows us to hold funds for your initiative, while still giving you the ability to request disbursements, track impact, and manage your budget. You get the benefits of nonprofit infrastructure without the burden of running one.

3. Donor Confidence & Tax Benefits

Donors to your project give through Pure Charity, a recognized 501(c)(3), and receive a tax deduction immediately. This builds trust and opens the door for individual donations, corporate matching, and foundation grants.

4. Transparency & Reporting

Because funds are held in a DAF, we can provide clean financial records, clear donation histories, and timely reports. This makes it easier to update your supporters and demonstrate accountability.

🌱 Summary

A Donor Advised Fund is a smart and proven tool that helps community organizers, movement builders, and social entrepreneurs raise and manage charitable funds responsibly—without the red tape of starting a nonprofit. Through a DAF-based fiscal sponsorship with Pure Charity, you get both the freedom to lead and the structure to grow.