Tax uncertainty in Washington is prompting donors,

Tax uncertainty in Washington is prompting donors, especially wealthy ones, to pour money into charitable-gift funds this year.

The reason: taxpayers fear Congress will cut or cap deductions for charitable contributions for 2013, so they are rushing to take advantage of current law.

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Mark Tyner/The Wall Street Journal

Investors are piling into charitable-gift funds run by Fidelity and others.

Compared with other tax dilemmas people are facing—such as whether to take capital gains—so-called donor-advised funds seem tailor-made for this year's uncertainty. They allow the charitably minded to contribute assets and take a full deduction for 2012, yet postpone giving decisions.

For example, a couple earning $200,000 gives $20,000 in cash to a charitable fund this year. They take a 2012 deduction for $20,000, and the money goes into a subaccount in their name at a sponsoring nonprofit organization.

Once in the subaccount, the money is invested and can grow tax-free until the couple designates eligible groups to receive it, at which point there isn't any deduction. There isn't a required annual payout, so the couple might give nothing in 2013 and then a large donation in 2014, to one church, charity or school—or many. The sponsor handles all tax paperwork, and some allow payouts of as little as $50.

Sponsors of charitable funds say many givers are combining the donor-advised format with a maneuver favored by tax-aware donors such as Warren Buffett. Donations of assets that have risen in value, such as shares of stock, often qualify for a deduction at the full market price, while the donor skips paying capital gains tax on the appreciation.

In other words, if the couple gives $20,000 of stock shares bought for $4,000 years ago instead of the same amount of cash, they still get a $20,000 deduction, but they bypass $2,400 of capital gains tax.

Many gifts to donor-advised funds this year have come in the form of appreciated assets, thanks to recent market growth. Kim Laughton, president of Schwab Charitable (affiliated with Charles Schwab SCHW +2.72% Corp.), says even many smaller accounts have been funded with a single donation of appreciated stock, often of oil-and-gas or technology firms.

"It's easier," she says, "to take a single large deduction and have us send many individual donations, rather than donating stock directly to charities."

Here are issues to consider:

Type of sponsor. By one estimate there are about 750 large charitable-fund sponsors. Those affiliated with money managers such as Fidelity Investments, Vanguard Group Inc., and Schwab, often allow donors broad discretion in making gifts. At a regional or community foundation or trust, donors sometimes have less freedom in choosing recipients, but the staffs often work closely with local charities—so one of these could make sense if you want to support causes in a particular locale.

A number of universities also sponsor charitable funds, but they often want a large donation. The University of Notre Dame asks that 50% of the contribution go to the school, which development officer Gregory Dugard says is typical for prominent schools.

Assets accepted. All charitable funds accept cash and publicly traded assets such as stocks, but some are able to accept "complex" assets such as real estate, interests in a business or nontraded stock. For this and other reasons, they are becoming an alternative to private foundations.

Minimums, fees, and investment choices. The minimum at Fidelity Charitable and Schwab Charitable is $5,000, while Vanguard's is $25,000. All three often charge an annual administrative fee of 0.6% on accounts of $500,000 and less, which drops as assets rise.

Donors with smaller accounts—generally less than $250,000—choose among investment pools rather than stocks and individual funds. Fees vary, from 0.07% to many times that. At Notre Dame, the minimum is $500,000, but there are no fees and the assets are managed as part of the school's endowment.

Grant-making policies. Donors "recommend" grants and the sponsor makes them. All must be to tax-deductible charities, but sometimes there are restrictions. Notre Dame, for example, won't give to embryonic stem-cell research.

Portability. What happens if you are unhappy with a sponsor? Some allow account transfers, while others don't.

Donors can never take contributions back, but some sponsors allow them to designate successors to make gifts if they die or become disabled, while others ask that remaining money go to the sponsor's general fund.