Donor Advised Funds are a wonderful tool, but like any financial product, they need to be monitored. They are super convenient when you have a block of money you want to put aside for charitable purposes but haven't yet designated. For a minimal annual fee, it's a way to set up your own mini-foundation. The tax deduction is taken when the money is put in the DAF; to donate the money, you simply find your preferred organization in their data base and click through a few menus. Voila! They are well-suited for intergenerational giving.
Fidelity and Vanguard offer them, as do many others. Some non-profits offer them as well.
Three things to watch out for, that I learned the hard way:
1. There is a minimum annual fee of $100. I disbursed most of my fund to some wonderful projects, leaving just $450 or so. This is the minimum administrative fee - unfortunately they've just deducted it, and now there's $350. So #1 rule is don't leave small amounts in your account!
2. The value of the fund goes down if the market tanks. This also had not occurred to me - that the value of the money I lovingly put aside would decrease just sitting there waiting to be donated. Of course if the market goes up (remember when that was typical?) the fund's value increases.
3. Since you can't take these funds back, and they're not part of your net worth spread sheet records, it's easy to simply lose track of them. Then they just sit around invested but accomplishing nothing of value in the world. (I'm not sure what happens to forgotten funds? Anyone out there know that?)