A donor-advised fund is a charitable account held at a sponsoring public charity. The donor contributes assets, takes the tax deduction in the year of the contribution, and then recommends grants to charities over time. The sponsor handles administration, recordkeeping, and grant processing.
The separation between the deduction and the giving is the feature most families use deliberately. Contributing in a high-income year — the year of a business sale, for instance — captures the deduction when it is worth most, while leaving the decision about which charities to support for later.
Appreciated assets held more than a year are the common contribution. Donating them directly rather than selling first generally avoids capital gains on the appreciation while still allowing a deduction based on fair market value, subject to the applicable limits.
The trade-off is control. Grant recommendations are advisory, and the sponsoring charity holds legal control of the assets. In practice sponsors follow recommendations to qualified charities, but the structure is not the same as a private foundation.
This definition is provided for educational purposes. It is general information, not investment, tax, or legal advice, and it does not account for any individual circumstances.