Charitable remainder trusts (CRTs) vs DAFs
Smart giving is not just generous; it’s strategic.
For individuals and families looking to align their values with their financial plans, giving tools like charitable remainder trusts (CRTs) and donor-advised funds (DAFs) offer meaningful ways to create lasting impact while unlocking valuable tax benefits. But these charitable giving vehicles are not one-size-fits-all.
Whether you’re on the verge of retirement, holding appreciated assets, or just trying to be more strategic about your charitable giving, being able to effectively compare and contrast a CRT with an up-to-date tool like GoFundMe Giving Funds can give you confidence in your giving — but also clarity.
What is a charitable remainder trust (CRT)?
A charitable remainder trust (CRT) is an irrevocable trust that permits you to donate to charity and continue receiving a stream of income generated by your trust assets. It’s one of several strategies for charitable giving in general, but one aimed specifically at high-net-worth individuals who wish to make a lasting impact — and plan around estate taxes and philanthropic goals.
So, how does a CRT work?
- You place assets (often appreciated assets like real estate or stocks) into a charitable remainder unitrust (CRUT) or charitable remainder annuity trust (CRAT).
- You receive an immediate tax deduction and a potential income tax deduction based on the present value of the remaining assets that will go to charity.
- The trust pays you or your chosen non-charitable beneficiaries income annually—either for life or a set number of years.
- After the term ends, the remaining trust assets go to one or more charitable organizations.
There are two primary types of CRTs:
- CRAT (Charitable Remainder Annuity Trust): Pays a fixed dollar amount annually.
- CRUT (Charitable Remainder Unitrust): Pay a set percentage of the trust’s value, recalculated each year.
These trusts are powerful for wealth management, offering a way to support public charities while generating an income stream for beneficiaries.
CRT financial benefits and trade-offs
Financial benefits
✅ Avoid capital gains taxes on appreciated assets transferred into the trust.
✅ Receive a steady income stream—either fixed or variable.
✅ Reduce estate taxes by removing assets from your estate.
✅ Receive an immediate tax deduction for the portion estimated to benefit a charitable cause.
Example scenario:
A 65-year-old donor with $500,000 in appreciated stock creates a CRT. They avoid $100,000 in capital gains taxes, receive a $150,000 charitable deduction, and generate $20,000 per year in tax-free income for life.
Considerations and trade-offs
❌ Requires professional setup and ongoing management with a financial advisor or financial professional.
❌ Irrevocable once established—no reversals.
❌ Works best for donors with at least $250,000 in assets who want structured estate planning and charitable giving strategies.
What is a donor-advised fund (DAF)?
Donor-advised funds (DAFs) are the easiest and most tax-advantageous way to give now and distribute later.
When you create a DAF account through GoFundMe Giving Funds, you can:
- Donate cash, non-cash assets, or appreciated securities and receive an immediate tax deduction.
- Potentially grow your balance through tax-free investment options managed by the sponsoring organization.
- Support verified nonprofits, public charities, and charitable causes across the country.
- Manage your giving in one place with a single tax receipt for your charitable gifts.
You don’t need a complex financial plan to start. With GoFundMe Giving Funds, you can open a DAF with as little as $5.
💡DAFs provide a tax-efficient way to give, combining flexibility, accessibility, and compliance with IRS rules for charitable purposes.
CRT vs. DAF: Which one fits you?
Here’s a quick side-by-side to help you compare options:
| Feature | Charitable Remainder Trust (CRT) | Donor-Advised Fund (DAF) |
| Tax Deduction | Based on remainder value | Based on the full contribution amount |
| Income Stream | Yes, fixed or variable | No income stream, but fund can grow |
| Complexity | High – requires legal setup | Low – managed online |
| Cost to Start | Typically $250,000+ | As little as $5 with GoFundMe Giving Fund |
| Flexibility | Irrevocable | Highly flexible |
| Who You Can Support | Registered charities | Registered charities |
| Ideal For | Estate planning, appreciated assets, philanthropic goals | Everyday donors seeking simplicity and control |
Can you use both a CRT and a DAF?
Yes. Some donors combine a charitable remainder trust with a donor-advised fund to maximize tax advantages. For instance, a DAF sponsor may inherit the remaining assets after the term of a CRT expires and can then make suggestions for grants to multiple charities in later years.
These dual strategies can be an excellent way for you to sustain your own future philanthropic goals and create a platform for family members to help carry out your vision of giving.
Which has better tax advantages?
Both come with significant tax benefits, but in different ways:
- CRTs provide you with an income stream, a charitable deduction, and estate tax savings, and are most appropriate in long-term financial situations.
- DAFs offer an immediate tax deduction, capital gains avoidance, and tax-free investment growth for rapid, flexible giving.
If you’re not sure, pose that question to a financial adviser and crunch the numbers on which is preferable, given your financial goals or adjusted gross income (AGI).
How do CRTs and DAFs stack up for estate planning?
If you’re looking for an estate planning plan, a charitable remainder trust and a donor-advised fund might both be fair candidates. CRTs will serve donors who already hold significant appreciated assets, and with DAFs, giving becomes more accessible for those who are seeking ease and convenience.
CRTs may make more sense for donors who are looking to have an income beneficiary during retirement. But a DAF can be attractive to donors who want a streamlined tax-advantaged way to manage and dictate their giving, both while alive and then after they are gone.
Is a charitable remainder trust right for me?
You might consider a CRT if you:
- Have large appreciated assets like real estate or stock.
- Want an income stream and estate tax benefits.
- Are working with wealth management or advisory services to structure your giving.
You might prefer a DAF if you:
- Want immediate flexibility and tax advantages.
- Rather have a more straightforward giving without legal hassle.
- Like the concept of continuous grantmaking under a sponsoring organization.
Why more donors are choosing DAFs like GoFundMe Giving Funds
CRTs play a very particular financial role, but GoFundMe Giving Funds can be a modern, seamless replacement for many people.
Here’s why:
✅ Easy to set up, no paperwork: In just a few minutes, you can create your GoFundMe Giving Fund. No legal fees, no trustees, no complications.
✅ Support the causes—and people—that matter to you: Donate to registered nonprofits, schools, or families in need through verified charitable organizations.
✅ One place to track your giving: Organize your donations year-round and get a single, simple tax receipt.
✅ Grow your giving: Invest your Giving Fund to potentially increase how much you can give over time—tax-free.
Give with impact, give with intention
If it’s setting up a charitable remainder trust or funding a DAF through GoFundMe Giving Funds, both can be an impactful part of your legacy. The key lies in knowing your financial situation, philanthropic goals, and how you want to give to charitable causes over time.
But with a bit of planning (and the right structure), you can make an impact that lasts.
Ready to get started?
This content is for educational purposes only and does not constitute tax, legal, or investment advice. Any financial or tax-related calculations provided are illustrative examples only and should not be relied upon for making financial decisions.
Laws and regulations regarding donor-advised funds vary, and tax benefits depend on individual circumstances. Readers should consult with a qualified tax, legal, or financial professional for personalized guidance.