Chances are you have donated to a friend or relative’s GoFundMe campaign.
The crowdfunding platform lets people raise money through fundraisers for personal financial needs like medical bills, or to help give a child who has lost a parent with an education fund.
Last week, the platform rolled out a more formalized way to be charitable — and reap the associated tax benefits. Called Giving Funds, the program lets individuals create their own donor-advised funds which then steer donations to 501(c)(3) nonprofits.
A donor-advised fund, or DAF, is a simple tax-saving vehicle for making charitable donations and has until now mostly been available from financial services firms like Fidelity, Schwab, and Vanguard.
You get an immediate tax deduction for your donation (whether you’re giving away cash, securities, or other assets) provided you itemize, and then divvy up grants of that money at a later date to a public charity. You can typically make donations for as little as $50 to a charity you select, depending on the firm.
To write off donations in a given year, your total tax deductions need to exceed the standard deduction to be worthwhile. For 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly.
One way to exceed that standard deduction threshold is to bunch together your contributions and give two years’ worth of deductions in one year in a donor-advised fund. That way your total giving will be high enough to allow you to itemize.
Learn more: Standard deduction vs. itemized: Which is right for you?
“We recommend donor-advised funds all the time — I think they are great even for folks who do not typically itemize on their tax returns because they can ‘bundle’ donations,” Ann Reilley, a certified financial planner in Charlotte, N.C., told Yahoo Finance.
These funds, however, aren’t top of mind for many Americans.
“Donor-advised funds have historically been inaccessible for most people, with high minimums and fees,” said Margaret Richardson, GoFundMe’s chief marketing and corporate affairs officer. “We’re launching Giving Funds now because the future of giving depends on making generosity simpler.”
With GoFundMe’s DAF, there’s no minimum amount to open an account and no transaction investment or management fees, per Richardson. Once you create your donor-advised fund on the platform, the account is managed by the GoFundMe Giving Fund with banking services provided by Goldman Sachs. Contributions can grow through investment options from BlackRock and Vanguard, according to Richardson.
Donors, however, are encouraged to leave an optional “tip” for GoFundMe by granting money from their Giving Fund to a charitable cause. When you do add a tip, it goes toward helping sustain the funding operations and ensures the product remains accessible to everyone, per Richardson.
At other firms, when you open a donor-advised fund, an opening balance of $5,000 to $25,000 is not uncommon.
Vanguard Charitable, for example, requires a minimum initial contribution of $25,000 to open a donor-advised fund and subsequent contributions to an established account must be at least $5,000.
At Fidelity Charitable, there’s no minimum to open a donor-advised fund with cash, checks, and stocks — even cryptocurrency. The minimum grant amount is $50, and funds are charged an annual administrative fee of 0.60% or $100, whichever is greater. Investment fees range from 0.015% to 0.91%.
You don’t have to have gobs of money to create a donor-advised fund for your charitable giving. The median account at Fidelity Charitable is $23,534, and over half of its accounts have less than $25,000.
You might donate stocks you have held for ages that have increased considerably in value during those years. If you donate securities that have appreciated in value, you won’t owe the capital gains taxes that would be due if you sold the stock and donated the proceeds, and your deduction will be bigger this way too.
Plus, you can invest the money for growth that is tax-free until you choose which charities you want to donate to.
One reason these funds are starting to hit people’s radar is that charitable giving has been on the rise.
Last year, total donations by individuals, bequests, foundations and corporations to nonprofit organizations climbed 6.3% to a record $592.5 billion, according to the latest report from the Giving USA Foundation. Individual giving jumped by 8.2% to $392 billion.
“Donor-advised funds are the preferred and increasingly popular choice for individuals who want to give to charity effectively over time,” Elaine Kenig, chief communications officer at Vanguard Charitable, said.
While the donor makes a decision about their desired grant recipients, the assets are invested in options made available to donors by the sponsoring organization, such as GoFundMe or Vanguard Charitable, and can grow tax-free, she said.
“This approach helps donors grow their charitable dollars and maximize the impact of their giving in the near- and long-term.”
Have a question about retirement? Personal finances? Anything career-related? Click here to drop Kerry Hannon a note.
Your age, though, can be a factor in whether a donor-advised fund is your best route. If you’re under 70 ½ and have highly appreciated securities and you itemize your taxes (rather than taking the standard deduction) then any amount is good for establishing a fund, Reilley said.
But if you are 70 ½ or older and have pre-tax assets such as a traditional IRA, a qualified charitable distribution (QCD) is the better way to go, she said.
Learn more: 4 ways to save on taxes in retirement
The QCD is available to IRA holders who are age 70 1⁄2 or older when the distribution is made, per the IRS rules. The transaction must be done by the end of the tax year. You can have your custodian or retirement plan administrator send the withdrawal directly to a qualified nonprofit, which keeps it off your individual tax return.
These charitable distributions from your retirement accounts count toward your required minimum distribution (RMD), and you can exclude them from gross income up to $100,000 annually.
One alert: 1099 Forms don’t show that the distribution was donated to charity. As the IRA owner, you need to let your accountant know and make sure they don’t include the distribution in income.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky.
Sign up for the Mind Your Money newsletter
Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more
Read the latest financial and business news from Yahoo Finance
