Many donors do not know that both donor-advised funds and private foundations can be used together.

That’s why on Wednesday The Fidelity Charitable Gift Fund and the Association of Small Foundations announced a new white paper titled “The Best of Both Worlds: Using Private Foundations and Donor-Advised Funds” to inform donors and advisors about how these two giving vehicles complement each other.

“As donors become even more forward-looking and strategic about their giving, we’re seeing an increase in the use of donor-advised funds as complements to private foundations,” said Sarah Libbey, president of the Fidelity Charitable Gift Fund, in a statement. “Working with ASF, we want to dispel the notion that donors must choose between a donor-advised fund and a private foundation -- and that the two vehicles are somehow mutually exclusive.”

“This collaboration is an important milestone in the philanthropic world,” said Kathryn Petrillo-Smith, managing director of the Association of Small Foundations, in a statement. “In an age where charitable dollars are tight, yet the call for philanthropy is on the rise, donor-advised funds and foundations can work together to help donors and those who advise them chose the vehicle -- or vehicles -- that best suit their needs and facilitate their giving.”

Sometimes a combination of both donor-advised funds and private foundations are beneficial, such as when a foundation is faced with complex questions determining exempt status (start-ups, supporting organizations and group exemptions as well as other cases) or has a large number of grants to process, Fidelity said. Donor-advised funds can handle these situations efficiently. When making anonymous grants donor-advised funds are a complement to a private foundation. That’s because donor-advised funds allow donors to decide, grant-by-grant, which donations will be anonymous. Another plus is that the standard tax deduction for donations to a private foundation is 30% of the donor’s Adjusted Gross Income. But with a donor-advised fund, a donor can make additional cash donations up to 50% of their Adjusted Gross Income, according to Fidelity.

Another benefit of a donor-advised fund is when a private foundation wants to close its doors. Private foundation assets can be transferred to qualified public charities, including donor-advised funds. A donor-advised fund allows the donor to continue to be involved in grant making after the foundation closes.

Since its inception, the Gift Fund has helped donors support more than 136,000 nonprofit organizations with over $11 billion in grants.