OTTAWA -- Millions of Canadians dig into their wallets and donate to charities every year, but if you want to build a lasting charitable legacy, experts say a donor-advised fund might be for you.

Bibi Patel, vice-president at the Ottawa Community Foundation, says a donor-advised fund is like having your own private foundation, but without the administrative headaches.

"It offers donors a chance to be involved and hands-on in their giving," Patel says.

To establish a donor-advised fund, you make a donation to a foundation that issues you a tax receipt for the initial amount. The money is then invested and gains are sheltered from tax, while you direct where grants from the fund are made.

Grants can be made to organizations that are recognized by the Canada Revenue Agency as a registered charity. To see if the organization you ultimately want to support is eligible, you can check the list of registered charities on the CRA website.

Patel says foundations like hers can also offer guidance regarding where your donations can go, based on your causes that you want to support.

"That knowledge that we bring to the table is really valuable to donors who want to know they are doing something, but they're not quite sure how to go about doing it," she says.

Jennifer Button, head of philanthropic advisory services at RBC Wealth Management, says donor-advised funds can be part of your tax and estate planning.

If you're facing a large tax bill from a windfall from the sale of your business, a donor-advised fund could be one way to offset some of that without having to decide immediately what charity you want to support.

"Often when a client is let's say selling a business, they're thinking of so many things that are relevant to selling their business," Button said.

"Yes, they've identified they're philanthropic, yes, they want to start with a foundation, but it might not be top of mind exactly which charity they want to support."

She says a donor-advised fund can give you the opportunity to start small and get to know a charity before making larger grants.

Donor-advised funds can also be used to help establish a legacy of giving and teaching your children about the importance of giving.

"It really is quite a powerful conversation," Button said.

Donor-advised funds aren't free.

The foundations that hold the money before it is granted charge a fee, generally a percentage of total assets, that goes to the administration of the fund and the related costs. The funds also carry some investment risk. If the stock market tanks, losses could reduce the amount of money that you have to give out.

But Button noted that the investment options offered for donor-advised funds tend to be balanced and conservative.

"You're not typically going to get the wild swings of growth, but you're also probably not going get the wild swings negative," she said.

Patel noted that donor-advised funds aren't just for the rich.

The Ottawa Community Foundation allows donors to establish a named fund with as little as $5,000, one of the lowest thresholds in the country.

"We feel strongly that we need to make it accessible to as many people as possible," she said.

Patel also says donors can maintain their anonymity by using a donor-advised fund.

"By working through us, they can retain the anonymous nature of their gift," she said.