For individuals and families looking to make a meaningful impact through charitable giving, two of the most common vehicles are Donor Advised Funds (DAFs) and Family Foundations. While both can support long-term philanthropy, they differ significantly in complexity, tax treatment, and the level of involvement they require. At Park City Community Foundation, we host DAFs and partner closely with donors to help them create strategic and purposeful giving experiences. From our perspective, we see the strengths and limitations of each approach.
Donor Advised Funds (DAFs)
A Donor Advised Fund is a charitable giving account that allows you to make an immediate tax-deductible donation—cash, stock, or other assets—then recommend grants over time to the causes you care about most. DAFs are typically chosen by families who want flexibility and impact without administrative burden.
Benefits of Donor Advised Funds:
Family Foundations
A Family Foundation is an independent legal entity governed by a family board and subject to its own set of IRS regulations. Family Foundations give donors maximum control over governance and grantmaking but require significant time, expertise, and administrative management.
Benefits of Family Foundations:
Deciding Which Vehicle is Right for You
Choosing between a DAF and a Family Foundation ultimately comes down to your goals: how much control you want, how public you want your giving to be, whether you intend to run your own charitable programs, and how much time you want to invest in administration.
While DAFs offer simplicity and flexibility, they operate under the oversight of the sponsoring organization, meaning donors do not have the same level of legal control they would have with a Family Foundation.
Conversely, Family Foundations provide autonomy but come with substantial ongoing responsibilities, including board governance, legal compliance, investment oversight, and mandatory annual distributions. This is often more than families anticipate when they first explore establishing one.
Establishing a DAF at Park City Community Foundation strikes the right balance for many local and part-time families. It provides the engagement and strategy of intentional giving without the bandwidth needed to maintain a Family Foundation. Donors also benefit from our local insight into community needs, curated connections to effective nonprofits, and opportunities to participate in collaborative efforts like the Early Childhood Alliance, Zero Food Waste, Women’s Giving Fund, and Youth United.
No matter your path, thoughtful philanthropy strengthens our community, and we’re here to help you design an approach that fulfills your values, vision, and legacy.
Interested in learning more about opening a Donor Advised Fund at Park City Community Foundation or getting a referral to discuss starting a Family Foundation? Reach out to Alexis Brown, VP of Development, at alexis@parkcitycf.org to explore your options, and visit our DAF page.
Posted in: Donors, Education & Trainings
Tagged: giving, donor advised fund