What Is A Donor Advised Fund (DAF) And How Does It Work?
Donor Advised Funds
Benefaction operates DAFs with Investment Advisors at Assante nationwide. As a public charity, we provide a channel for granting to your clients’ favorite charities, allowing them to streamline and organize their charitable giving. Having a DAF is like establishing their own charitable foundation, but without all the hassle.
The Process Is Simple
Gift
Your client completes our Donor Agreement where they name their fund and share other important details like their disclosure preference to charities and identify their successors. These details can all be updated later if the client desires. They open their fund with a minimum $25,000 donation and, upon receipt, Benefaction issues a donation tax receipt which your client can use to help offset taxes payable.
Benefaction accepts donations of cash, publicly listed securities, privately held shares, RRSPS and RRIFs, life insurance and bequests in Wills.
Grow
Benefaction’s Investment Management Agreement with Assante allows you to manage the assets within the DAF, in accordance with our Investment Policy Statement. All investment income and gains will grow tax-free since Benefaction is a registered charity. Over time your client can make further donations to continue to grow their fund.
Grant
Your client recommends to Benefaction the grants to charities they wish to make from their fund. They can choose to support any CRA registered charity or other qualified donee. An annual disbursement minimum applies (currently 5% of the value of the fund per CRA), following the year of inception. However, they can grant more if they wish as they can grant the capital in their fund, not just the income.
Grants will be processed within 10 business days of the receipt of the funds into a Benefaction bank account and grant requests received after November 15th are processed on a best-efforts basis before year-end.
Your client manages and controls their giving with ease while they are alive, through their fund, and ensures their motivations and vision are well understood for when their family or friends succeed them in directing grants from the fund. Benefaction also accepts gifts by Will to continue your client’s legacy after they are gone.
The Process
Want to understand our process? Check out the video beside or click here!
Tax Advantages of Gifts of Publicly Listed Securities
Check out our explainer video which outlines the tax advantages of gifts of publicly listed securities.
What Are The Fees Associated With A DAF At Benefaction?
| Donation Amount / Ongoing DAF Balance | Donation Fee (applies to initial and subsequent donations to the DAF and the tiers are based on cumulative donation amounts over time) | Annual Fee (based on the market value of the assets in the DAF and collected quarterly in arrears) |
| $25,000 - $999,999 | 1% | 0.50% |
| $1,000,000 - $1,999,999 | 0.50% | 0.50% on the first million and 0.35% on the rest |
| $2,000,000 - $2,999,999 | 0.35% | 0.50% on first million, 0.35% on the next, and 0.15% on the remainder |
| $3,000,000+ | Negotiable with Benefaction | 0.50% on first million, 0.35% on the next, and 0.15% on the remainder - Maximized out at $5,000 |
Why Should You Consider Incorporating DAFs Into Your Wealth Management Practice?
DAFs can help you to attract and retain High Net Worth Clients who wish to give back. Benefaction delivers fully customizable giving programs designed to complement your suite of wealth management services. Our mission is to encourage philanthropy by helping Canadians maximize charitable giving while minimizing tax burdens. We provide everything you need to support your clients’ vision in a way that is streamlined, efficient and rewarding for you both.
We’ll Help You
Differentiate your practice and attract new assets by offering a more holistic wealth management solution to clients and prospects
Retain existing assets under your management while meeting your clients’ philanthropic objectives
Deepen client relationships and extend the conversation beyond investments