Merrill Lynch Donor Advised Fund: Contributions, Deductions, and Grants

The Merrill Lynch donor advised fund is the Bank of America Charitable Gift Fund (CGF), a 501(c)(3) public charity that Merrill Lynch offers as a giving account for its clients. You contribute at least $25,000, take an immediate income tax deduction in the year of the gift, and then recommend grants to charities on whatever schedule you choose. Merrill Lynch handles the investment platform and administration; the CGF’s board holds final legal authority over every grant and investment decision.

How the Account Works

The CGF is a standalone public charity, separate from Bank of America’s corporate operations. When you open an account, you make an irrevocable gift to that charity. You keep advisory privileges over how the balance is invested and where grants go, but you no longer own the assets. That legal shift is what triggers the deduction at contribution rather than at grant.

Your Merrill Lynch financial advisor can help you fund the account, choose investment allocations, and submit grant recommendations. The CGF board reviews every grant recommendation to confirm the recipient is a qualified U.S. public charity in good standing. Grants to established nonprofits clear routinely; smaller or newer organizations can take longer while tax-exempt status is verified.

Minimum Contribution and What You Can Give

You need $25,000 to open an account. Additional contributions have a $250 minimum.¹ The CGF accepts:

Cash and cash equivalents, including checks, wires, and credit card contributions.
Publicly traded securities such as stocks, bonds, mutual funds, and ETFs.
Complex assets, including restricted stock, closely held business interests, and commercial real estate.

Complex assets go through additional due diligence, and the fund may charge separate evaluation costs (appraisals, legal fees, insurance, third-party property management) directly against your account.² Donating an illiquid asset only pays off when the tax savings clearly outrun those expenses.

The Tax Deduction and AGI Limits

Your contribution generates an income tax deduction in the year of the gift, even if you don’t recommend a single grant for years. You have to itemize on Schedule A (Form 1040) to claim it.³ The deduction is capped based on your adjusted gross income and the type of asset:

Contributions above the applicable limit carry forward for up to five additional tax years.⁵ A donor with $1 million in AGI who gives $500,000 in appreciated stock can deduct $300,000 that year and roll the remaining $200,000 into the next year under the same 30% cap.

The biggest single reason to fund a DAF with appreciated securities held more than a year: you deduct the full fair market value and skip the capital gains tax you would have owed if you sold first. For publicly traded securities, fair market value is the average of the high and low trading prices on the contribution date. If you’ve held the asset a year or less, the deduction drops to the lesser of cost basis or fair market value, which erases the capital gains benefit. Short-term holdings are usually better sold and given as cash.

One boundary matters for 2026. Congress created a new above-the-line charitable deduction for standard-deduction filers, worth up to $1,000 single and $2,000 joint, but it specifically excludes contributions to donor advised funds.³ If you take the standard deduction, a DAF contribution produces no tax benefit.

Substantiation for Non-Cash Gifts

Non-cash gifts over $500 require Form 8283 (Noncash Charitable Contributions) with your return. Contributions above $5,000 require Section B of the form and a qualified independent appraisal by an appraiser meeting the IRS definition.⁶ The appraisal has to be dated no earlier than 60 days before the contribution and no later than the return’s due date. Publicly traded securities don’t need an appraisal because their value is set by market prices. Skipping the appraisal on real estate or closely held stock, or using an appraiser who doesn’t qualify, can wipe out the deduction entirely. The appraisal fee itself is not a deductible charitable contribution.

Investment Options and Fees

Assets inside the CGF grow tax-free. You pick from pre-built investment strategies overseen by Bank of America’s investment teams, ranging from conservative fixed income to equity-heavy allocations. Balances are pooled for investment but tracked separately at the account level.

Fees come in two layers. The annual administrative fee is tiered by total account balance:

$0 to $100,000: 0.90%
$100,001 to $500,000: 0.75%
$500,001 to $1,000,000: 0.50%
$1,000,001 to $2,500,000: 0.35%
$2,500,001 to $5,000,000: 0.25%
$5,000,001 to $10,000,000: 0.15%
$10,000,001 to $20,000,000: 0.12%
$20,000,001 to $50,000,000: 0.10%
Over $50,000,000: custom pricing

The administrative rate applies to the entire balance from the first dollar, not marginally by tier. On top of that, an annual investment advisory fee of 0.12% is assessed monthly on assets not invested in Columbia Funds.² At the $25,000 minimum, the combined annual cost is roughly 1.02% before underlying fund expenses. That is worth weighing against DAF sponsors with lower fees on smaller balances.

Recommending Grants

Grants are recommended through the CGF online portal or by submitting a Grant Recommendation Form. The minimum grant is $250, or the remaining balance if it’s smaller.⁷ Once approved, the CGF sends the money to the charity directly. The charity treats the funds as a grant from the CGF rather than from you.

There is no IRS-mandated annual payout for a DAF. Unlike private foundations, which must distribute at least 5% of assets each year, DAFs have no minimum distribution requirement under current law.⁸ Balances can accumulate indefinitely, though the IRS has signaled continuing interest in the question.

What DAF Grants Cannot Do

Grants cannot produce a personal benefit for you, your family, or a related party. That rules out using DAF money to buy event tickets you attend, pay membership dues that come with benefits, purchase auction items, or cover sponsorships that carry perks. On pledges, the line is whether the pledge is legally enforceable: a DAF cannot satisfy an obligation a court could compel you to pay, but it can support a charity you’ve expressed non-binding interest in helping.

If the CGF makes a grant that shouldn’t have been approved, the fund faces an excise tax of 20% of the distribution amount.⁹ That penalty is why the board’s compliance review is more than a rubber stamp.

Successors and Estate Treatment

The account doesn’t have to end at your death. You can name successor advisors, usually a spouse or children, who take over grant and investment recommendations after the last original donor dies. Successors can name their own successors. You can also skip naming an individual and instead direct that the balance go to specified charities.⁷ Succession has to be set up inside the CGF’s own paperwork; the fund won’t honor instructions in a will or trust.

The balance is outside your taxable estate because you already parted with ownership at the contribution, and post-contribution growth stays outside as well. For a large charitable plan, the combination of an immediate income tax deduction and estate exclusion is more tax-efficient than a charitable bequest, which gives an estate tax deduction but no lifetime income tax break.

1
Bank of America Private Bank. Donor-Advised Fund
2
Bank of America. Bank of America Charitable Gift Fund Fee Schedule
3
Internal Revenue Service. Topic No. 506, Charitable Contributions
4
Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
5
Internal Revenue Service. Publication 526 (2025), Charitable Contributions
6
Internal Revenue Service. Instructions for Form 8283
7
Bank of America. Bank of America Charitable Gift Fund Program Guidelines
8
Internal Revenue Service. Donor-Advised Funds
9
Office of the Law Revision Counsel. 26 USC 4966 – Taxes on Taxable Distributions