How does a donor-advised fund work?

A. First, the donor makes an irrevocable contribution to the charity that offers the donor-advised fund, thus qualifying for an immediate tax deduction. The donor may then name the donor-advised account that is established with this contribution (e.g. "The Jones Family Charitable Fund").

Also, the donor may designate himself as the account advisor, or may name others as account advisors. Account advisors have the privilege of recommending grants from the account to support their favorite public charities over time. Account advisors also recommend how the account assets are invested and nominate successor-advisors.

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