DAF or Foundation?

“Many of my clients have wealth that is newly made or created,” says Lisa Kirchenbauer, head of Kirchenbauer Financial Management & Consulting in Arlington, Virginia. “When I’m helping them learn about charitable giving, normally we start with a donor-advised fund. I think it’s a good place to practice more formal and conscious philanthropy. The process of naming your fund, thinking about who you might give grants to, how you will invest the money, how you will distribute (anonymously or not), etc., is a great experience for most of my clients. Once it’s established and funded, I’ve encouraged several of them to get their children involved in ‘grant making’–i.e., finding organizations and causes that they care about, and using the gift fund to support these causes. Much to my clients’ surprise, their children have come up with some great organizations to support.”

All in all, she says, “I think donor-advised funds are a great way to communicate the value of philanthropy and give children an opportunity to actively participate in the process. They’re also a great way to see how your children deal with money-related issues.”