Philanthropy has expanded far beyond writing a year-end check. Today, tools like Donor-Advised Funds (DAFs) allow individuals and families to give more strategically, unlock valuable tax advantages, and even grow their charitable assets over time. For those holding real estate or alternative investments like BREIT or BCRED, DAFs can also provide a smart solution for charitable giving.
What Is a Donor-Advised Fund?
A Donor-Advised Fund is a charitable investment account created for the sole purpose of supporting charitable causes. You contribute cash, securities, or other eligible assets, receive an immediate tax deduction, and then recommend grants to your chosen nonprofits over time. Meanwhile, the assets inside the fund can be invested and grow tax-free — amplifying your long-term impact.
Key Benefits of DAFs
Immediate Tax Deduction
Donors receive a charitable deduction in the year they contribute to the DAF, even if grants are made years later.
Cash contributions are generally deductible up to 60% of adjusted gross income (AGI).
Appreciated assets such as securities, real estate, BREIT, or BCRED are deductible at fair market value up to 30% of AGI, making them especially powerful for tax planning.
Avoiding Capital Gains Taxes
Donating appreciated assets — such as securities, real estate, or BREIT/BCRED shares — allows you to bypass capital gains tax, increasing the amount directed to charity.
Tax-Free Growth
Assets inside a DAF can be invested, giving your charitable contributions the chance to grow over time, tax-free.
Flexibility in Giving
Contribute for one year and distribute grants over several years, ensuring ongoing support to nonprofits.
Family Legacy and Engagement
Families can involve children or heirs in recommending grants, creating a multi-generational culture of giving.
Beyond Cash: Real Estate and Alternatives in DAFs
While many donors contribute cash or publicly traded securities, DAFs often accept non-traditional assets, which can be especially powerful for high-net-worth families.
1. Real Estate: Donating appreciated property allows donors to avoid capital gains taxes, take a fair market value deduction, and shift the responsibility of sale/liquidation to the DAF sponsor.
2. BREIT (Blackstone Real Estate Income Trust): With an 8.3% annualized inception-to-date return as of July 31, 2025, BREIT provides steady growth potential. Donating BREIT shares can convert an illiquid, appreciated holding into philanthropic capital while eliminating embedded capital gains tax exposure.
3. BCRED (Blackstone Private Credit Fund): BCRED has provided an average annual distribution rate of 9.6% as of August 2025, offering consistent income potential. Contributing BCRED can turn a private credit position into charitable resources while also supporting future growth within the DAF.
4. Other Alternatives: Depending on the DAF sponsor, private equity, hedge funds, or other alternative investments may also be accepted.
By leveraging these types of assets, donors can transform holdings that may otherwise generate tax burdens into lasting charitable resources.
Eligible Beneficiaries
Grants from a Donor-Advised Fund can support any IRS-qualified 501(c)(3) public charity, including:
Educational institutions
Religious organizations
Health and human services nonprofits
Environmental initiatives
Arts and cultural groups
Growing Your Giving
Once assets are contributed, they can be invested within the DAF, allowing them to grow tax-free. For donors using vehicles like BREIT and BCRED, the combination of income distributions and long-term appreciation means the DAF can generate additional dollars for charitable giving year after year.
Final Thoughts
Donor-Advised Funds combine simplicity, tax efficiency, and long-term growth potential with the flexibility to support a wide range of causes. For families with wealth tied up in real estate or alternatives such as BREIT and BCRED, a DAF offers a unique opportunity: turning complex assets into meaningful, tax-advantaged philanthropy while still benefiting from growth and income potential inside the fund.
If you're unsure where to start or want to learn about how DAFs could fit in your portfolio, don’t hesitate to connect with your financial advisor today.
Donor-Advised Funds: A Strategic Way to Give, Grow, and Maximize Complex Assets
October 13, 2025
Mica McKenna
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