You don't have to have billions, like Warren Buffett or Bill Gates, to improve the world through philanthropy. Millions of Americans do it on a smaller scale each year, and a lot of them are creating their own mini foundations with no legal hassle. By Knight Kiplinger, Editor Emeritus June 30, 2006 Like most Americans, I get great joy from charitable giving -- sharing my material blessings with organizations that make this a better world. But a few years ago, as my list of charities grew longer and longer, I began to feel overwhelmed by the complexities of active philanthropy.There was writing and mailing checks, many of which required explanatory cover letters; hurriedly deciding at year-end which of my favored charities would receive donated shares of appreciated stock or mutual funds; doing the paperwork for those asset transfers to a dozen different grantees; and keeping all the records for my tax preparer. Relief at last Today those hassles are history, and I owe it all to the giving account I opened with a donor-advised fund (DAF). Donor-advised funds have done for philanthropy what online brokers did for investing and online banking did for bill-paying. Why do I love my DAF? Let me count the ways. First, it's a snap to use. I can make a donation ($250 or more) from my online account in 60 seconds, and my DAF will mail it with a cover letter, which I can customize -- for example, by earmarking the gift for a particular purpose. Advertisement I also like the tax advantage my DAF offers me. When I make a charitable donation of appreciated assets to my DAF (avoiding the capital-gains tax), I get an immediate deduction, but I don't have to decide right then which charities will eventually receive my money. The DAF will sell my donated assets, park the proceeds in my account and invest them as I instruct. I can take my time -- a few months or a few years -- to decide on disbursements. Record-keeping is simple. My donor-advised fund creates a searchable database of my past giving. I can see at a glance when, how much and for what purpose I gave. Finally, my privacy can be protected, if I choose. Because checks and cover letters come from the DAF, my identity can be shielded from the charity (if, for example, I'd rather not receive its solicitations). In short, using my donor-advised fund is like having a private foundation, but without the legal red tape, such as annual tax returns. Advertisement Many DAFs will set up an account with a minimum donation of $10,000, replenished with additional contributions of $1,000 or more. Typical annual fees run no more than 1% of the account balance. I consider this a great bargain for the time and trouble saved. You may be wondering what "donor advised" means. It means that you may only suggest to the DAF that its trustees make a certain grant on your behalf. In practice, a DAF will honor your recommended grant to virtually any tax-exempt charity. Many DAFs allow you to extend this grant-advising privilege to others after your death. So if you leave a bequest to your DAF in your will and name your children as successor advisers, you can instill in them your passion for philanthropy. And you can name your DAF account as you wish (for example, The Smith Family Charitable Fund). Where to go Many different kinds of organizations run donor-advised funds, among them community foundations (multi-donor local and regional funds), giant financial-services firms (Fidelity, T. Rowe Price, Raymond James, Charles Schwab, Vanguard and others), and nonprofits such as universities and churches. American Endowment Foundation is the rare national DAF not affiliated with a financial-services company or particular charity. Advertisement DAFs run by individual charities sometimes charge no annual fee, but they typically require that a portion of the money in your account -- say, 30% -- go to them. To compare different DAFs, do a Web search for "donor-advised funds." It will be time well spent. Columnist Knight Kiplinger is editor in chief of Kiplinger's Personal Finance and of The Kiplinger Letter and Kiplinger.com.