Quick overview
Donor-advised funds (DAFs) and direct giving both produce tax-deductible charitable contributions, but the timing of the deduction and the required documentation differ. With a DAF, you get the deduction when you contribute to the sponsoring organization and the DAF provides the receipt and annual statements. With direct giving, the recipient charity supplies acknowledgments, and you may need to file IRS forms (especially for noncash gifts).
This guide explains the documentation you should collect in each scenario, how IRS rules apply (IRS Publication 526 and the IRS donor-advised funds page remain the primary sources), and practical record-keeping steps I use in client work to reduce audit risk.
Sources: IRS Donor-Advised Funds (https://www.irs.gov/charities-non-profits/charitable-organizations/donor-advised-funds) and IRS Publication 526 (Charitable Contributions) (https://www.irs.gov/publications/p526). For more on noncash reporting, see Form 8283 guidance (https://www.irs.gov/forms-pubs/about-form-8283).
How deductions and receipts differ: the essentials
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Timing of deduction:
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DAF: Deduction is claimed in the year you transfer the cash, stock, or other assets to the sponsoring organization. Once the donor-advised fund accepts the gift, it is treated as a completed charitable contribution for tax purposes (see IRS DAF guidance).
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Direct giving: Deduction is claimed in the year the charity receives your gift (cash, check, credit card charge, or electronically transferred securities).
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Who issues the written acknowledgment:
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DAF: The sponsoring organization issues the contribution receipt (and often annual statements) listing the donation date and value. Keep that receipt—it’s your primary proof for the deduction.
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Direct giving: The receiving charity must provide a written acknowledgment for any single donation of $250 or more. For smaller cash gifts, bank or credit card records usually suffice (IRS Pub 526).
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Grant distributions:
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DAF: Grants from a DAF to charities are made by the sponsoring organization. These grants do not create a new deduction for the donor—the deduction was already taken when the donor funded the DAF.
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Direct giving: Grants or donations to charities are the action that creates the deduction.
Substantiation rules to memorize (practical checklist)
- Cash gifts under $250: Keep a bank record, credit card statement, or payroll deduction record showing the charity name, date, and amount.
- Cash or check gifts of $250 or more: Obtain and keep a contemporaneous written acknowledgment from the charity (or from the DAF sponsor for DAF contributions). The acknowledgment must state the amount, whether goods or services were provided, and describe any noncash property donated (IRS Pub 526).
- Noncash gifts over $500: You must file Form 8283 (Noncash Charitable Contributions) with your tax return. Keep a copy of the form and any donor records.
- Noncash gifts over $5,000: In most cases you need a qualified appraisal and must attach Section A or B of Form 8283 depending on the asset type; the donee (charity or sponsoring DAF) will sign the donee acknowledgment on Form 8283 for the portion they accept.
- Donated publicly traded securities: When you transfer appreciated publicly traded securities directly to the DAF or to a charity, record the transfer confirmation, brokerage transfer receipt (e.g., DTC/ACATS confirmation), and the date the charity/DAF received the stock. For long-term appreciated stock, you usually deduct fair market value (assuming you meet the holding period rules).
Caveat: Rules differ for certain tangible personal property, closely held stock, and conservation easements—these have specialized appraisal and reporting requirements. See IRS Pub 526 and Form 8283 instructions.
How this works in practice: receipts, statements, and Forms
- Donating cash to a DAF
- What you’ll receive: A contribution receipt from the DAF sponsor dated when the sponsor accepted your gift. The receipt should show amount and a statement about goods/services. Keep it with your tax records for the year you claim the deduction.
- Why it matters: If you claim the deduction for that tax year, the DAF receipt replaces individual charity acknowledgments for that contribution.
- Donating appreciated stock to a DAF
- What you’ll receive: Sponsor confirmation of securities transfer and an annual statement showing the gift’s value and date. Keep transfer confirmations and brokerage statements showing date and fair market value.
- Forms: If the gift is noncash and exceeds $500, include Form 8283. If over $5,000, attach the appraisal and get the DAF to sign the donee section.
- Giving cash directly to a charity
- $250 or more: A written acknowledgment from the charity is required. Don’t rely only on a receipt in a donor portal screenshot—prefer a signed letter, email acknowledgment, or formal receipt that includes the required elements.
- Under $250: Keep bank or credit card records showing the transaction.
- Donating noncash property directly to a charity
- If the gift is over $500, file Form 8283. If over $5,000, secure a qualified appraisal and include it with your return when required. The charity usually signs the donee portion of Form 8283.
Record retention recommendations (what I tell clients)
- Keep records at least three years from the date you file the return (IRS statute of limitations is generally three years), but retain appraisal and property records for seven years if you claimed a large deduction or if the property’s basis matters.
- Required documents to save:
- DAF contribution receipts and annual statements (sponsoring organization)
- Charity written acknowledgments for gifts ≥ $250
- Bank or credit card records showing date and amount
- Brokerage transfer confirmations and account statements for securities
- Copies of Form 8283 and any appraisals
- Qualified appraisal reports for gifts > $5,000 (or when required)
- Form 8282 if the donee sells the property within three years (this is a donee filing, but you should track it if applicable)
Common pitfalls and how to avoid them
- Mistake: Treating DAF grants as deductible to the donor. The deduction is when you fund the DAF, not when you recommend grants. Document the funding receipt carefully.
- Mistake: Missing the $250 rule. If you claimed multiple small gifts to the same charity that add up to amounts ≥ $250 during the year, each gift still needs proper substantiation (the $250 rule applies per contribution).
- Mistake: Failing to file Form 8283 for large noncash gifts. If you omit required forms, the IRS can disallow the deduction or ask for supporting appraisals later.
- Mistake: Relying only on portal screenshots. Always obtain formal acknowledgments that include required language; many DAF sponsors and charities provide PDFs or letters that meet IRS standards.
Example scenario
You sell appreciated stock in January but want the donation to count for this year’s taxes. Two options:
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Option A — fund a DAF with the stock: Transfer shares to the DAF in December. You receive a DAF receipt and claim a deduction in that tax year for the fair market value (assuming long-term gain property rules are met). Later the DAF recommends grants to charities.
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Option B — sell the stock and donate cash directly: You’ll realize capital gains and donate cash; your deduction equals the donated cash, not the previously appreciated stock’s pre-sale value. Documentation: charity acknowledgment for any gift ≥ $250; brokerage and bank records for the sale and subsequent donation.
In my practice I often recommend Option A for donors seeking both a tax-efficient result and time to select final charities. The DAF sponsor’s contribution receipts and transfer confirmations simplify year-of-deduction substantiation.
Related resources on FinHelp
- Learn more about how donor-advised funds operate: Donor-Advised Funds: How They Work.
- For detailed rules on receipts and substantiation for all charitable gifts, see: Documenting Charitable Contributions: Receipts, Substantiation, and IRS Rules.
- For noncash reporting specifics, consult our Form 8283 overview: Form 8283 – Noncash Charitable Contributions.
Final checklist before you file
- Do you have the DAF sponsor’s contribution receipt for the year you claimed the deduction?
- Do you have written acknowledgments from charities for any gifts ≥ $250?
- Have you completed and attached Form 8283 for noncash gifts > $500 (and secured appraisals when required)?
- Do you have brokerage transfer confirmations for securities donated directly to a DAF or charity?
- Are appraisal reports and Form 8283 copies stored with your tax records?
If you answer yes to these and keep digital backups, you’ll minimize documentation risk.
Professional disclaimer: This article is educational only and does not constitute tax or legal advice. For guidance tailored to your situation, consult a qualified tax advisor or attorney. The IRS rules cited here are current per IRS Publication 526 and the IRS donor-advised funds guidance; always check the latest IRS materials before filing.
