Donor-advised funds, which allow investors to deposit assets for an upfront tax deduction and then make donations to charities of their choice, are becoming a popular option for investors, according to Fortune.The funds start out like a typical investment account. An investor deposits cash, securities, or in some cases, real estate in a fund that invests in stocks and bonds. The minimum is usually $10,000.

Then an investor takes an immediate tax deduction and makes grants to their favorite charity whenever they want. The rest of the money continues to grow (or diminish) and investors can name the account anything they wish.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.