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Comment by tunesmith | Hacker News Reader

I must be missing something about the benefit. Given that these funds charge a fee, what is the benefit of them, over just making charitable contributions directly to non-profits? It's not a tax benefit, is it, since the contribution size can be written off either way?

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The benefit is decoupling the timing of setting funds aside for charity and the timing of donating to organizations. For example, let's say that your income this year was unusually high (you sold your company, you received a bonus, or some other one-time event) and you plan to donate $100,000 to charity. If you put the money in a donor-advised fund you get the tax deduction immediately, but you can decide what exactly to do with the money later. For example, you can choose to donate $10,000 per year over the next ten years. Yes, there are fees, but on the plus side the money can be invested in a mutual fund while it's sitting in the donor-advised fund. Eventually the money will be donated, there is no way to get it back.

In addition to the benefits described by the other commenters, DAFs also make it simple and cheap to donate appreciated securities (stock, etc.)

For most smaller nonprofits, accepting donations of securities can require lots of paperwork and incur expensive transaction fees. With a DAF, you can donate the security to the DAF, have the DAF sell it without tax consequences, and then have the DAF donate cash.

They do provide a tax benefit. See: https://en.wikipedia.org/wiki/Donor-advised_fund#Tax_efficie...

It seems like that tax benefit is really reducing taxes on the donation itself, rather than enriching the donor (as implied)? Am I understanding that right?

That is correct.

You can donate appreciated assets (such as stock) to a charity directly, and you get to deduct the current market price on your taxes without having to pay capital gains on the asset.

Donor advised funds simply make this process simpler. You can donate your appreciated asset to a donor advised fund (which acts as a 'charity') and immediately realize the tax write-off, and then later decide what charity to give the money to.

This article seems to be making a big issue out of the fact that there are a lot of donor advised funds in Silicon Valley that are waiting to give the money out, or giving it out over time instead of making one big donation immediately. I fail to see the issue - this is just people moving money around to optimize for taxes - the money will still be given to a charity.

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