What's a Donor-Advised Fund? (And Should You Use One?)

Oct 31, 2025

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If you’ve ever wished your giving could be both simpler and more strategic, there’s a powerful tool worth knowing about: the donor-advised fund, or DAF for short.

Generosity isn’t just about how much you give—it’s about the heart behind it. As Paul reminds us in 2 Corinthians 9:7, “Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.”

Wise stewardship allows us to align our giving with God’s purposes, using tools that help us maximize our Kingdom impact. A donor-advised fund—when used rightly—can help you do both: give joyfully and steward resources efficiently.

What Is a Donor-Advised Fund?

Think of a DAF as a charitable checking account designed to support the causes you care about. You contribute cash, stock, or other assets, receive an immediate tax deduction, and then recommend grants to ministries or charities on your timetable.

In other words, it separates the act of giving from the act of distributing. You might contribute during a high-income year or before selling an asset to take advantage of tax benefits, while taking time to decide where those dollars should go prayerfully.

Behind the scenes, your DAF is managed by a sponsoring organization. At FaithFi, we recommend the National Christian Foundation (NCF)—one of the largest and most trusted Christian providers, founded by Larry Burkett and Ron Blue. NCF handles the record-keeping, issues the grants, and provides online tools to manage your giving.

Suppose you plan to sell a business or a piece of real estate that would normally result in a significant capital gain. By donating it to your donor-advised fund before the sale, you can avoid paying capital gains tax, allowing more of the donation to go directly to Kingdom purposes.

You receive an immediate tax deduction for the full value of your gift since it’s considered an irrevocable charitable contribution. The funds can be invested for potential growth while you prayerfully decide which ministries to support—or you can give immediately.

When you’re ready, you simply recommend a grant, such as $10,000, to your church or a mission organization. The DAF sponsor verifies the charity and then sends the gift—either in your name or anonymously.

The Benefits of a Donor-Advised Fund

Donor-advised funds have become the fastest-growing vehicle for charitable giving in America, and for good reason. They combine flexibility, simplicity, and intentionality—all with a focus on Kingdom impact.

Here are some of the key advantages:

Simplicity – One contribution can fund all your charitable giving, with a single tax receipt and one dashboard to track every grant.
Tax Efficiency – Receive your deduction when you contribute, not when you give. Donating appreciated assets can help avoid capital gains taxes, increasing the amount that goes to ministry.
Flexibility – Give now and decide later where the funds should go, allowing generosity even as you discern where God is leading.
Legacy Planning – Name successors—such as children or grandchildren—to carry on your legacy of generosity.
Focus on Mission – Since the administration is handled for you, you can focus your energy on prayerfully deciding where to give.

Important Limitations to Consider

No giving tool is perfect. Here are a few things to keep in mind:

Irrevocability – Once you contribute to a DAF, it’s a completed gift—you can’t take the funds back.
Qualified Recipients – Grants can only be made to IRS-approved charities, not individuals or political causes.
Timing of Impact – Funds can remain in the account for years, which may delay charitable impact.

At FaithFi, we encourage believers to use DAFs for timely generosity rather than indefinite storage. A DAF is meant to organize your giving, not to hold back what God has already called you to release.

Why FaithFi Recommends NCF

There are many donor-advised fund providers—but not all share your faith commitments. That’s why we recommend the National Christian Foundation (NCF).

NCF doesn’t just process gifts; they walk with donors in prayer and biblical wisdom. Their Giving Funds simplify generosity, reduce tax burdens, and amplify Kingdom impact. They can even accept complex, non-cash gifts, such as real estate, business interests, or agricultural assets.

More importantly, NCF’s team seeks to help every believer become a joyful, generous steward who advances the Gospel through wise giving.

To learn more or to open your own Giving Fund, visit FaithFi.com/NCF. You can set up your fund in just minutes. And if you’d like a trusted financial advisor to guide you in the process, visit FindaCKA.com.

At the end of the day, a donor-advised fund is just a tool—but in the hands of a faithful steward, it becomes a powerful way to partner with God in His work.

When our giving flows from gratitude and trust, every dollar becomes a declaration: God owns it all, and we are His stewards.

That’s what it means to give with joy, wisdom, and eternal purpose.

On Today’s Program, Rob Answers Listener Questions:

My husband was recently diagnosed with a serious health condition, and we’re trying to decide whether it’s wise to downsize our home. We currently owe about $198,000, but we’re also looking at another house for $137,500. With today’s interest rates, we could do a 15-, 20-, or 30-year loan. If my husband’s income were to go away, would it be smarter to stay where we are or move to the smaller home with a lower payment?
I’m 61 and wondering whether I should withdraw money from my 401(k) to pay off my car loan instead of taking out a new one. I’ve been looking at my budget and income, and I’m not sure if that’s the best move. What do you think?
My husband recently passed away. He had an IRA worth a little under $70,000, and I have one too. My financial advisor suggested that I roll his IRA into mine—can I do that, and would that be the best approach? Also, our home is in an irrevocable living trust. Am I allowed to sell it, or does it have to stay in the trust?
Our term life insurance policy is set to expire soon. We could cash it out or roll it into a whole life policy, but we already have enough life insurance. With a child heading to college in about a year and a half, we’re wondering if there’s a smart way to put that money into savings for college without taking a big tax hit.

Resources Mentioned:

Remember, you can call in to ask your questions every workday at (800) 525-7000. Faith & Finance is also available on Moody Radio Network and American Family Radio. You can also visit FaithFi.com to connect with our online community and partner with us as we help more people live as faithful stewards of God’s resources.

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