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. 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.
As you deliberate this decision, remember that no matter what the marketing materials may say, a DAF can never be “just like a private foundation.” Here are some considerations that might influence your choice to convert your private foundation to a donor-advised fund: