Donor advised fund

In the U.S. a donor advised fund is a public charity which serves as a convenient umbrella giving vehicle for individual or institutional contributors. One or more donors make initial irrevocable and unconditional contributions to an account within the fund, getting immediate tax deductions and normally becoming account advisors. They name the account (e.g., The John Doe Memorial Fund for Educational Excellence) and usually choose among multiple investment pools. Over time, the advisors may make subsequent donations, and they recommend grants to charities they select. Approval of grant recommendations is essentially automatic as long as the fund's rules and IRS regulations are satisfied.

Advantages

 * Tax savings: Donor-advised funds generally accept gifts of marketable securities (e.g., publicly traded stocks & mutual funds), and they sometimes accept certain special assets (e.g., private equity & hedge funds). Donation of appreciated assets yields a double tax advantage. Contributions are fully deductible, though IRS limits may force deduction of especially large gifts to occur over a period of years, per Pub 526. . Moreover, the donor escapes payment of capital gains tax. Note that grants an advisor makes from a fund account are not deductible.
 * Deliberate giving: The timing of a big charitable donation is often motivated by tax considerations associated with a particular year. However, prudent selection of the specific charities to benefit may take a substantially longer period. A donor-advised fund provides a good solution to this problem.
 * Investment growth: A donor's account value has the potential to increase over the years with the financial markets, resulting in larger charitable grants.
 * Estate planning options: Donor-advised funds usually have a rich set of choices related to the original advisors' deaths, such as the ability to continue a gifting tradition by naming successor advisors. You can further enhance a legacy goal of instilling a charitable tradition by making the donor advised fund a beneficiary of an IRA or Charitable Remainder Trust.
 * Paperwork simplification: A contributor who frequently makes gifts to several charities, especially of securities, will experience a reduced paperwork burden by using a donor-advised fund.
 * Optional anonymity: An account advisor is free to request selected grants be made anonymously.

Alternatives

 * Direct giving: The straightforward method is frequently best, as it puts the donation to work immediately for the desired cause, while avoiding donor-advised fund fees. There are some drawbacks to this approach, however, especially when the selected charity is small and tax considerations prompt a lump sum contribution. If the gift is large, the organization may not spend it wisely, whereas smaller donations spread over a period of years are often utilized more effectively. Also, tax savings may motivate a gift of appreciated securities, but some charities have difficulty handling noncash contributions.
 * Split-interest giving: A contributor to a donor-advised fund receives no financial benefits as a result of the gift, aside from tax breaks. Split-interest giving addresses this drawback. An example is Fidelity's Pooled Income Fund, though this arrangement is more often associated with well-established traditional charities.
 * Private foundations: Donor-advised funds provide limited investment options, and they restrict potential grant recipients to recognized public charities. Sponsors of private foundations exercise a much higher degree of control over their charitable assets, with respect to both investment and granting. Unfortunately, foundations are very complex and costly to administer, and they are subject to tight IRS regulation. Only extremely wealthy individuals and families need consider this option.

Notable examples

 * Fidelity Charitable Gift Fund (Largest donor-advised vehicle in the U.S.)
 * Schwab Charitable Fund
 * T. Rowe Price Program for Charitable Giving
 * Vanguard Charitable Endowment Program (Also: Local wiki page)

Charity recommendations
The reader should refer to Charity selection links for guidance in selecting an appropriate charity.