# What is a donor-advised fund? How it works, and how Christian families use one

*URL:* https://christianfinancialadvisors.com/resources/articles/donor-advised-fund/
*Updated:* 2026-10-29T09:18:05+00:00

A donor-advised fund is a charitable account at a sponsoring public charity. You give cash, stock or other assets, may qualify for a deduction the year you give, and recommend grants to your church and ministries over time. Your tax preparer or CPA can tell you what that deduction looks like for your situation and the rules in effect this year.

I call it pre-giving. Before the year ends, I put money into my own donor-advised fund, and I decide later where it goes. On our [podcast](https://christianfinancialadvisors.com/podcast/donor-advised-funds-give-more-save-more/), my co-host Shawn Peters said it this way: “So this is your prepaid gift card for donating to charity.” That is exactly right. I have used one for years, and in one stretch of conversations with families, giving through donor-advised funds generated for the Kingdom in excess of $2-3 million. Here is how a fund works, what you can put into one, and how Christian families use one to give with purpose.

## How a donor-advised fund works

A donor-advised fund works in three steps. First, you give to the fund. Second, depending on your situation and the rules in effect that year, you may qualify for a charitable deduction for the gift, which is a question for your tax preparer or CPA. Third, you recommend grants to your church and other ministries when you are ready, whether that is next year or five years from now.

I think of it as a charitable investment account. The sponsoring charity holds the money, the balance can be invested while it waits, and you decide when it goes out. Once you give to the fund, the money has to go to charity and you cannot take it back out. How much flexibility you keep depends on how the fund is set up. In a single-charity fund, the money stays with that one charity. In a multi-charity or flexible giving fund, the money still has to be given away, but you can change which charities receive it later.

A fund also simplifies your giving. Instead of giving directly to many charities, you give to the fund and recommend grants from it, so you handle the paperwork for one account instead of many. It also takes pressure off me at year end. I do not have to find charities in a hurry. I have plenty of time to decide, and we give to our church and to other causes from our fund now.

On one of our [Christmas episodes](https://christianfinancialadvisors.com/podcast/the-true-financial-meaning-of-christmas/), Shawn compared a fund to a savings account for giving. A family can let gifts build up inside the fund over a few years until there is enough to pay for a new clean water well, and then recommend the grant.

John Madison, a CPA and the founder of Dayspring Financial Ministry, joined us as a guest on the podcast and described another use. You can make a larger contribution to the fund and then have the fund send your church a check each month for your tithe. From the church’s side, it looks just like a check placed in the offering plate.

### Where a donor-advised fund fits among the ways to give

Several years ago I developed a program for church workshops called [10-4-4 giving](https://christianfinancialadvisors.com/podcast/charitable-giving-strategies-using-non-cash-assets/): ten planned giving strategies, four time periods for giving, and four giving tools. I walked through it on the podcast with Ryan Assunto of the National Christian Foundation. The donor-advised fund is the first of those tools, and it works alongside the others, including charitable remainder trusts and gifts of property.

## Why people use one: three situations we see

**The small church windfall.** A client came to us at Christian Financial Advisors® after he sold his business. He wanted to tithe on the sale, but his church was small, and he was concerned that one very large gift would change how the other members saw their own giving. They might decide the church no longer needed their tithes. So we opened a donor-advised fund for him, and he gives from it to his church over time.

**The same worry I wrote about years ago.** A gift of $100,000 to $300,000 to a church or ministries all at once could actually [deter others from giving](https://christianfinancialadvisors.com/resources/articles/creatived-giving-part-6-the-donor-advised-fund-continued). Many organizations are also not equipped to handle a gift that large. With a fund, you give once and then send grants to the same ministries slowly over time, so you do not discourage other givers.

**A big income year.** A bonus, a business sale or an oil and gas discovery can bring in far more than a family expected. Picture a couple who own ranch land and learn that oil and gas has been found on it. They want part of it to go to ministry, but they have not yet prayed through where. A fund lets them give in that year and take their time choosing grants. The tax side of a big income year is covered on our donor advised fund tax deduction page.

## What you can give to a donor-advised fund

Cash is the simplest gift, but much of what most families own is not cash. A fund can receive many other kinds of assets, depending on the sponsor. Here is my list:

- Cash
- Appreciated stock
- Bonds
- ETFs
- Real estate, such as a lot you planned to build on and never did
- Vehicles
- Valuable art
- Mineral rights from oil and gas, and water rights
- Business interests
- The fund named as a beneficiary of an IRA or another qualified plan

Sponsors differ on which assets they accept, so confirm with the sponsor before you plan a gift of anything other than cash or stock. For real estate and other property gifts, see our guide to donating property to charity.

My own habit is to give an appreciated stock or an ETF to my fund rather than cash, and in 2024 I made a large gift of appreciated stock. Giving an appreciated asset instead of selling it first can change how much of the gain is taxed to you, which depends on your situation, so confirm the details, including how long you have held the asset, with your tax preparer or CPA. How much of a gift you can deduct also depends on the type of asset and your income, and our donor advised fund tax deduction page covers that.

## A family giving fund

A fund does not belong to one person. It can be for your whole family, and anyone in the family can contribute to it. We call ours the Barber Family Giving Fund. I fund it at the end of the year, and sometimes I have a large amount to put in before I know who it will go to. I would like to hold family meetings around our fund so we can decide together where the money goes.

If you want a simple way to start, fund a new family giving fund with maybe half of what you spent on Christmas, and then sit down with your kids and grandkids and talk about how you will give that money away.

We have shared with our children that a percentage of our estate plan will go to the fund, and I can watch their eyes light up when we talk about it. One guest on our podcast put it well: leaving charitable money for your heirs to give away passes along values, not just valuables.

If you are weighing a fund against a private foundation, that comparison has its own page.

## Giving now and after you are gone

My wife and I have set up 20% of our estate to go to our family giving fund when we pass away, and my IRAs are part of that 20%. I think a retirement account is one of the best assets to leave to charity. Depending on your situation and the rules in effect, the people who inherit a pre-tax IRA may owe income tax on what they receive, while a charity may not. Your CPA can walk you through how that applies to you.

A client with $2 million in his IRAs told me he plans to leave all of it to a donor-advised fund. He set it up as a family giving fund so anyone in the family can contribute to it and the family can keep giving. He has told me which charities he wants it to support, and we will help advise the fund when the time comes.

Every day I meet people with large 401(k) balances who have never thought about naming a charity, a donor-advised fund or a giving fund as a primary or contingent beneficiary on the account. Naming one fund instead of listing several charities also keeps your documents simple, because you do not need to rewrite them every time a charity changes. A fund may even be able to support the ministries your children or grandchildren serve in.

## Choosing a sponsor, and how Christian Financial Advisors sets one up

Most sponsors offer investment portfolios that range from conservative to aggressive growth, and the one we use is a Christian based one: the [National Christian Foundation](https://www.ncfgiving.com) (NCF). It is the fund we recommend to clients. A Christian sponsor’s statement of faith limits which grants it will make. Grants to non-Christian charities, such as an animal shelter, can still be allowed.

NCF charges an annual fee on a blended schedule:

Balance tier
Annual fee

First $0.5M
0.90%

Next $0.5M
0.70%

Next $1.5M
0.50%

Next $2.5M
0.35%

Next $5M
0.30%

Next $10M
0.25%

Next $15M
0.20%

Next $15M
0.15%

Next $25M
0.10%

Next $25M
0.05%

We set the fund up for clients as a ministry of ours, and we charge 15 basis points (0.15%) on accounts opened with NCF. We ask for a $5,000 minimum to open a fund, and opening one online takes only a few minutes. NCF also charges a minimum annual fee of $360, which is $30 a month.

One thing a fund cannot do is receive a [qualified charitable distribution](https://christianfinancialadvisors.com/resources/articles/qualified-charitable-distribution/) from your IRA. For the full picture of what can go wrong with a fund, read our donor advised funds pros and cons, and to compare sponsors, see our top 10 donor-advised funds.

## What the Bible says about giving through a fund

Acts 20:35 gives us the heart of it: “In every way I’ve shown you that it is necessary to help the weak by laboring like this and to remember the words of the Lord Jesus, because he said, ‘It is more blessed to give than to receive.’” (CSB)

At year end it is easy to write a stack of checks because the calendar says December 31. A fund lets a family give prayerfully rather than in a December rush, and take the time to be thoughtful about how much goes to which church or ministry.

I remember when our children were young and we would hand them the check and say, “Put that in the offering plate.” Sometimes they would try to open it to see how much it was, and their eyes would get big. They were seeing that we give as a family. A fund carries that habit forward. Shawn said it well on our episode: long after you have gone home to be with the Lord, a fund can continue to expand God’s Kingdom.

A donor-advised fund turns a year-end scramble into a family’s long habit of giving. Christian Financial Advisors® can set one up with the National Christian Foundation and help you decide what to give into it. Learn more on our [Planned Giving page](https://christianfinancialadvisors.com/services/planned-giving-services/).

[Explore Planned Giving Options](https://christianfinancialadvisors.com/services/planned-giving-services/) [Talk to an Advisor](https://christianfinancialadvisors.com/meet/consult/)

## Frequently asked questions

### Is a donor-advised fund only for wealthy families?

No. A fund does not require a large estate. Through us, the minimum to open a fund with the National Christian Foundation is $5,000, and opening one online takes only a few minutes. A fund tends to fit families who give regularly, give more than cash, or want to involve their children and grandchildren.

### How much does a donor-advised fund cost?

Costs vary by sponsor. The National Christian Foundation charges an annual fee on a blended schedule that starts at 0.90% on the first $0.5M and steps down as the balance grows, as shown in the table above, with a minimum annual fee of $360. Ask any sponsor you consider for its current fee schedule before you open a fund.

### Can my donor-advised fund pay my church tithe each month?

In general, yes. You recommend a grant to your church, and many families ask the fund to send the church a check on a regular schedule, such as monthly. The National Christian Foundation offers recurring grants, though other sponsors vary. A tax preparer or CPA can explain how tithing from a fund affects your return.

### Can I name a donor-advised fund as the beneficiary of my IRA?

Yes. You name the fund on the beneficiary form with your IRA custodian, and you can name it for part or all of the account. That is different from a [qualified charitable distribution](https://christianfinancialadvisors.com/resources/articles/qualified-charitable-distribution/), which cannot go to a donor-advised fund. Your CPA can explain the tax effects for your family.

### Can I give to any charity from a Christian donor-advised fund?

Grants go to qualified public charities, and a Christian sponsor limits grants by its statement of faith. A grant to a cause outside the church and ministry world, such as an animal shelter, can still be allowed. If you are unsure about a particular charity, ask us before you plan the grant.

### What happens to the fund when I die?

You can name successors, such as your children, who then decide which charities receive grants from the fund, or you can name the charities that would receive what remains. If you leave no successor and no instructions about which charities should receive the money, the National Christian Foundation seeks to grant 75% of the balance to causes you supported and 25% to its own ministry. Naming successors ahead of time is how a family keeps the giving going.

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