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QCDs have some advantages over DAFs. First, QCDs are tax-free, while DAFs are only tax-deductible. Second, QCDs can be used to satisfy required minimum distributions (RMDs), while DAFs cannot. Finally, appreciated stock and real estate can pass to your heirs with a step up in basis upon your death.

The differences that would be most relevant to your charitable giving strategies are: A CRT will provide you with an income stream should you so choose to receive it, whereas a DAF does not. You will pay a percentage of the assets as a fee to the DAF provider for managing the assets with no or low initial set up costs.

Also, some DAF sponsoring organizations require a minimum initial contribution of $25,000 or more, pricing some out of the DAF market, while other sponsors require a minimum grant amount too high for individuals who donate less than $250 each year. All DAFs come with annual administrative costs and investment fees.

In California, there are two main types of charitable trusts: The charitable lead trust. The charitable remainder trust.

Qualified charitable distributions can be made only to certain qualified charitable organizations, as defined in the tax code. Currently, QCDs cannot be made to donor-advised fund sponsors, private foundations and supporting organizations, though these are categorized as charities.

To open a donor-advised fund, a donor selects a sponsoring organization. Community foundations run a number of these funds and so do financial service companies such as Fidelity, Schwab, and Vanguard. Once established, the donor makes an irrevocable, tax-deductible contribution into the fund.

Disadvantages of Donor-Advised Funds (DAFs) Another complaint that has been levied at DAFs is that the funds profit from the donations they receive via the fees that they charge to donor accounts. For example, Fidelity Charitable charges the greater of $100 or 0.6% for the first $500,000 of donations to its fund.

The trust provides upfront income tax benefits to the donor when the contribution to the trust is made. Donating highly appreciated assets, such as stocks, ETFs and mutual funds, to the charitable trust can help you avoid paying capital gains taxes that would be due if these assets were sold outright.