Community Foundation DAFs versus commercial DAFs

Written by Clark Collier, CAP, Director of Giving Strategies

Donor-advised funds (DAFs) have become one of the simplest and most effective ways to manage charitable giving. However, many clients (and even some advisors) do not realize they already have access to a more personal, more locally-oriented version of this tool right here at CICF Collaborative.

Consider the situation of a hypothetical client, Debbie Jones, who had established a DAF at a national financial institution simply because it was the default option presented when she opened her investment accounts. Debbie enjoyed supporting her favorite charities, involving her grandchildren in giving decisions, and maintaining the administrative simplicity of a donor-advised fund. What she did not know, however, was that the same benefits—along with a more focused impact on Central Indiana communities—were all available through entities in the CICF Collaborative (which includes Central Indiana Community Foundation, Hamilton County Community Foundation, and the Indianapolis Foundation).

During a review with her advisor, Debbie mentioned a desire to “feel more connected” to her Hoosier community through the impact of her giving. Her advisor reached out to us to explore whether her DAF could be handled through a CICF Collaborative entity. Debbie was surprised to learn how seamless the process could be and how little would change in terms of administration. Nothing became more complex from a tax or compliance standpoint.

The difference emerged in the level of service and connection. As soon as the new DAF was established, Debbie began working with a dedicated philanthropic advisor who not only understood Central Indiana, its nonprofits, and its evolving challenges – but also lived here. When Debbie considered contributing appreciated real estate, she and her various advisors did not have to navigate the process on their own; our team helped structure charitable recipient components of the transaction and coordinated with Debbie’s legal and tax advisors.

What’s more, as Debbie’s grandchildren began participating in family philanthropy, our team facilitated inter-generational conversations about values, legacy, and long-term charitable intent. We also provided Debbie with thoughtful research on nonprofits working in the areas she cared about most, along with invitations to programs and gatherings that deepened her understanding of issues in Central Indiana. And Debbie certainly appreciated that the administrative fees associated with her fund were reinvested locally, strengthening the very community she wished to support.

For Debbie’s advisor, the change was painless. Working with us, it was easy to create a new DAF agreement that mirrored the terms of Debbie’s original fund, even incorporating updated successor provisions. Debbie then initiated a grant from her commercial DAF sponsor to the community foundation, funding the new DAF. Because transfers between donor-advised funds are tax-neutral, no income was recognized and no new charitable deduction was generated. The full balance was transferred in a single transaction, and before closing the original account, her advisor helped Debbie download past grant and contribution histories to ensure her records remained complete.

In the end, Debbie gained more than a new location for her DAF—she gained a local philanthropic partner. Debbie now receives the guidance, insight, and personal connection she had been seeking. Her advisor also now enjoys a relationship with CICF Collaborative, ensuring that Debbie’s charitable plan aligns with her overall goals. And most importantly, the Central Indiana community benefits from a generous donor who is more engaged, better informed, and more connected to the organizations she supports.

If you have clients like Debbie—or any clients seeking deeper purpose, more tailored support, or a closer connection to Central Indiana—we are honored to be your partner. Please reach out anytime!

About the CICF Collaborative

CICF Collaborative is a partnership of philanthropic organizations working together to strengthen communities across the region. Each entity within the CICF Collaborative (including the cornerstone entities, Central Indiana Community Foundation, Hamilton County Community Foundation, IMPACT Central Indiana, the Indianapolis Foundation, and Women’s Fund of Central Indiana) brings deep knowledge, strong relationships, and its own individual, focused mission. The CICF Collaborative unites the entities by providing shared services, allowing the entities to operate more efficiently and effectively. By leveraging what we each do best, we’re able to better serve our communities and create more lasting impact, together. Learn more »

About the Author

Clark Collier is CICF’s director of giving strategies, working with individuals, families, and their advisors to structure meaningful and impactful philanthropy. As a Chartered Advisor in Philanthropy (R), Clark provides gift planning support and counsel to the CICF Collaborative and nonprofit organizations throughout the region. He previously served as a philanthropic advisor for CICF and in development roles for both local and global organizations.