A donor-advised fund is like a charitable investment account. Its purpose is to support charitable organizations you care about. When you contribute cash, securities or other assets to a donor-advised fund, you are generally eligible to take an immediate tax deduction. Then those funds can be invested for tax-free growth, and you can recommend grants to virtually any IRS-qualified non-profit foundation or charitable organization.

1. Make a tax-deductible donation - Donate cash, stocks or non-publicly traded assets such as property, cryptocurrency and private company stock to be eligible for an immediate tax deduction. A contribution to a donor-advised fund is an irrevocable commitment to charity; the funds cannot be returned to the donor or any other individual or used for any purpose other than grant making to charities.

2. Grow your donation, tax-free - As soon as a donation is made, it can potentially grow, making available even more money for charities. Most organizations that sponsor donor-advised funds have a variety of investment options from which you can recommend an investment strategy for your charitable dollars.

3. Support charities, now or over time - You can support virtually any IRS-qualified foundation or charity with grant recommendations from the donor-advised fund.

Albert Einstein is said to have called "the power of compound interest the most powerful force in the universe." Compounding interest is a powerful mechanism for growing vast wealth over time.