Common Scenarios for Transitioning a Private Foundation to a Donor Advised Fund

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As Baby Boomers age and retire, many older adult children are coming to grips with private family foundations set up by their parents decades earlier, before donor advised funds (DAFs) were an option for most families.

While the first DAF was technically established in 1931 as New York Community Trust, federal legislation clarifying DAF rules that would allow DAF accounts to be made easily available to almost anyone did not arrive until the mid-2000s with the Pension Protection Act. Families who did their estate planning in the 20th century and wanted to facilitate ongoing grant-making were generally advised to form private family foundations. Even today, in 2022, clients meeting with an estate planning attorney or tax advisor often open a conversation about charitable planning with: “Of course, at some point we’ll probably set up a foundation...”