Donor-Advised Funds (DAFs) have been present in Canada since the 1950s. However, since 2019, they have surged in popularity. According to a report from Strategic Insight, assets in Canadian DAFs tripled between 2006 to 2016 with an estimated value by the end of 2016 of nearly $4 billion. The continued popularity of DAFs in Canada trails that of the US; by the end of 2016 there was an estimated $78.6 billion of assets in the US held in DAFs.

1. Donor Advised Funds
Canadians are generous people. For more than a decade, millions of Canadians have
chosen to support the work of more than 85,000 charitable organizations across the
country. The generosity of that nature hasn’t changed, but how we give continues to
evolve.
Donor-Advised Funds (DAFs) have been present in Canada since the 1950s. However,
since 2019, they have surged in popularity. According to a report from Strategic Insight,
assets in Canadian DAFs tripled between 2006 to 2016 with an estimated value by the
end of 2016 of nearly $4 billion. The continued popularity of DAFs in Canada trails that
of the US; by the end of 2016 there was an estimated $78.6 billion of assets in the US
held in DAFs.
But what is a Donor-Advised Fund and why are they so popular?
DAFs emerged as a less costly and easier to administer alternative to private
foundations. Usually, private foundations are only practical for the very wealthy. DAFs
provide the benefits of a foundation but are more accessible to a wider audience. DAFs
are usually sponsored by independent charities, public foundations, and financial
institutions. The concept is you donate to a DAF and receive an immediate tax receipt.
Then, at some point in the future, you provide instructions to the DAF about which
registered charities you would like them to send the money to.
DAFs have several benefits.
First, they’re flexible. You can donate cash, securities, life insurance proceeds, and
other types of financial assets. There are some DAFs in the US that permit donors to
contribute Bitcoin to their DAF accounts. A big benefit is that by separating the gifting
decision and the tax receipt, a DAF allows folks to develop a plan that meets their
charitable goals and minimizes their tax liability. When you add funds to a DAF, you
immediately get a tax receipt. The money remains in the account, it can be invested, it’s
able to grow and down the road, you can decide how the funds should be allocated to
registered charities.
If in a given year you happen to be in a high tax bracket, a contribution to a DAF
provides immediate tax relief. Once the money is in the DAF account, you have time to
research and decide which causes you’d like to donate the funds to. Separating the
gifting and the tax receipt provides an opportunity to plan. If you’re worried about the
public attention your gift may create, a DAF could be the solution. When money is
allocated from the DAF to a charity, the original source of funding doesn’t have to be
revealed.
This is an additional benefit of the DAF, it provides anonymity. As well, a DAF provides
a way to pool resources. Friends and family members are able to contribute to your

2. DAF account and receive a tax receipt, and the pooled funds can then be allocated to a
registered charity. A DAF also provides a legacy. DAFs can be established with the goal
of supporting a cause well beyond the lifetime of the person who originally set it up.
There are many features to Donor-Advised Funds, consider the above as just a brief
introduction to the topic. You should discuss all the details with your financial
professional to ensure it fits with your financial plan.
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The comments and opinions expressed in this article are solely the work of Clinton
Orr, not an official publication of Canaccord Genuity Corp., and may differ from the
opinion of Canaccord Genuity Corp’s. Research Department. Accordingly, they should
not be considered as representative of Canaccord Genuity Corp’s. beliefs, opinions or
recommendations. All information is given as of the date appearing in this article, is
for general information only, does not constitute legal or tax advice, and the author
Clinton Orr does not assume any obligation to update it or to advise on further
developments related. All information included herein has been compiled from
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