Private foundation donors are sometimes encouraged to transition their organization to a donor-advised fund (DAF). The pitch often goes something like this: “Why put up with the burden and time demands of a private foundation when you can have the same advantages in an easy-to-manage donor-advised fund?”
Although a DAF can be a useful complement to a private foundation (many of our clients have both charitable vehicles), the two are by no means interchangeable. The fundamental distinction is that a private foundation is a freestanding legal entity, and a donor-advised fund is an account within a public charity. From this difference flow other distinctions regarding control, authority, and philanthropic capabilities that may be critically important to you or future stewards of your philanthropy.