Wealth Management

Donor Advised Funds: A Smart Way to Manage Your Giving

There’s more to charitable giving than you may realize. Here’s one method that may be tax-efficient and can help maximize your impact.

Key Takeaways

  • A donor advised fund (DAF) is a charitable giving account into which you can make irrevocable contributions that may qualify for a federal income tax deduction in the year you give.
  • Donated assets can remain invested and potentially grow tax-free in a charitable managed account, supporting your long-term giving goals.
  • You can recommend grants from your DAF at any time, allowing you flexibility to decide which causes to support beyond the year in which you may claim a federal income tax deduction.
  • Some DAFs may allow you to donate complex assets, including shares of privately held companies, cryptocurrency, real estate, art or automobiles.  

Want to make a charitable contribution before year-end but need more time to decide which organizations to support? A donor advised fund (DAF),  such as the Morgan Stanley Global Impact Funding Trust (MS GIFT), may give you that flexibility. Administered by a 501(c)(3) public charity, a DAF functions as a charitable managed account, allowing you to recommend grants to your favorite charities while giving you potential federal income tax benefits at the time of donation. To determine whether this approach may fit your charitable giving plans, it helps to first understand how a DAF works.

What is a donor advised fund?

A donor advised fund (DAF) is a charitable managed account into which you can make irrevocable charitable contributions that may qualify for a federal income tax deduction the year you donate. Then, you can decide which eligible charities to support by advising a grant at any time, without further tax implications.1 DAFs may help you help simplify and administer your charitable giving, providing you with necessary documentation to claim a federal income tax deduction when you donate.2  You also receive regular statements listing gifts, grants, fees and investment performance for your records.

 

Morgan Stanley also offers a suite of philanthropic services including our DAF program, the Morgan Stanley Global Impact Funding Trust (MS GIFT). Your Financial Advisor can work with you to help set up, manage, and administer your DAF.*  

 

You can donate a variety of assets to DAFs, such as cash and publicly traded securities; but some DAFs, like MS GIFT, can even accept more complex assets including shares of privately held companies, cryptocurrency, real estate, art, automobiles or other items that may need to be appraised.

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What are the tax benefits of Donor Advised Funds?

In addition to providing flexibility around when you support eligible charities, a DAF may offer potential tax benefits:

 

  • Donating appreciated securities to a DAF may help you mitigate potential capital gains tax while giving you flexibility to plan your charitable giving over time.
  • If you itemize deductions, your contribution may qualify for a federal charitable income tax deduction in the year you make it.1
  • Donated assets can be invested, with the potential to grow tax-free, increasing the amount available for future grants.

 

For individuals who itemize deductions, cash contributions to a DAF may be deductible for federal income tax purposes up to 60% of adjusted gross income, subject to applicable rules.3 Amounts above the applicable limit may generally be carried forward for up to five years. Keep in mind that contributions to a donor advised fund are irrevocable, which means they cannot be returned to the donor.

How do donor advised fund grants and investments work?

A DAF allows contributed assets to be invested and potentially grow tax-free, until you recommend when and where grants should be made. Donors can choose from several investment approaches, including any strategies allowed within Morgan Stanley’s Select UMA® and Portfolio Management programs, which can help connect investment choices with their charitable goals.

 

Before opening a donor advised fund, it helps to understand the program’s minimums. MS GIFT requires an initial contribution of at least $25,000 and has a minimum grant recommendation of $250. Additional contributions can be made to top up MS GIFT accounts with a minimum of $5,000.

How can a donor advised fund support family giving?

With a DAF, you can involve your family in choosing the organizations you decide to donate to. Beyond creating shared giving experiences today, a DAF can also help establish a long-term philanthropic legacy. If you already have a DAF, you may open a NextGen Account through your Morgan Stanley Financial Advisor, giving your future generations the ability to support their own causes and build charitable giving practices with a lower minimum investment and additional contribution limit. Additionally, you can name a successor to continue managing your giving plan when you are no longer able to do so

Is a donor advised fund right for you?

A DAF may be worth considering if you want a potentially tax-efficient, structured way to manage charitable giving overtime. It can help simplify recordkeeping, support a multiyear giving plan and give family members a role in charitable contributions. DAFs can serve as an accessible way to enjoy immediate tax benefits and are a flexible way to facilitate charitable giving.

 

Your Morgan Stanley Financial Advisor can help you determine whether a DAF aligns with your charitable goals and develop a coordinated giving strategy that aligns with your broader financial priorities. 

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Footnotes:

1 Source: The 2025 Giving USA Report: Giving USA: The Annual Report on Philanthropy for the Year 2024, published June24, 2025, by Brian Browne and Jeff Hilperts, https://www.bwf.com/giving-usa-2025-report-insights/

2 This deduction is only available if you elect to itemize your deductions.

3 The taxpayer will have to include a form in their tax return filing and may need to get a qualified appraisal. The DAF would not do this on their behalf.

4 Effective in the 2026 tax year, taxpayers who itemize deductions and make charitable contributions will only be able to claim an income tax deduction to the extent that their qualified contributions exceed 0.5% of the donor's AGI. Amounts disallowed under this rule carry over for up to five taxable years. Also starting in 2026 tax year, the tax benefit of itemized charitable deductions will be capped at 35 percent, even for taxpayers in the 37 percent marginal tax bracket.

Disclosures:

The Morgan Stanley Global Impact Funding Trust, Inc. (MS GIFT) is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended that sponsors a donor advised fund program. MS Global Impact Funding Trust (MS GIFT) is a donor advised fund. Morgan Stanley Smith Barney LLC provides investment management services to MS GIFT. Back office administration provided by RenPSG, an unaffiliated charitable gift administrator.

Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning, charitable giving, philanthropic planning and other legal matters.

While we believe that MS GIFT provides a valuable philanthropic opportunity, contributions to MS GIFT are not appropriate for everyone. Other forms of charitable giving may be more appropriate depending on a donor’s specific situation. Of critical importance to any person considering making a donation to MS GIFT is the fact that any such donation is an irrevocable contribution. Although donors will have certain rights to make recommendations to MS GIFT as described in the Donor Circular & Disclosure Statement, contributions become the legal property of MS GIFT when donated. The Donor Circular & Disclosure Statement describes the risks, fees and expenses associated with establishing and maintaining an MS GIFT account. Read it carefully before contributing.

Although the statements of fact and data in this material have been obtained from, and are based upon, sources that the firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. This material is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

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Due to the new and evolving nature of digital currencies and the absence of comprehensive guidance, many significant aspects of the tax treatment of Digital Assets are uncertain.  Prospective donors of crypto currency should consult their own tax advisors concerning the tax consequences to them regarding the purchase, ownership and disposition of Digital Assets, directly or indirectly through a fund or product, under U.S. federal income tax law, as well as the tax law of any relevant state, local or other jurisdiction.

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