Study after study has shown that charitable giving trends ramp up in the fourth quarter. Bolstered by holiday spirit and the need to make gifts to avoid taxes, December is, by far, the month when individuals feel most charitable. But what about the rest of the year? While nonprofit organizations are getting flooded with donations in November and December, charitable giving tends to taper off considerably after January 1st.
What if you could make your tax-deductible gift in one shot, dole it out to multiple 501(c)(3) organizations and determine when the gifts were distributed? With a Donor Advised Fund (DAF), you can. A DAF can be opened with an initial contribution of cash, stocks or real estate. The donation can be written off your taxes in the same year and you can recommend who, how much and how often you would like your favorite qualified charity to receive gifts from that fund.
What’s even better is that the remaining balance in that DAF is invested and the return allows your pool of available charitable funds to grow. And, you can contribute any qualified asset to the fund at any time. For example, if you have a vacation home you no longer use, but have not sold it because of the capital gains tax you would have to pay as a result, you can donate that property to the DAF, receive the tax deduction and grant those funds at your convenience. Or, if one of your preferred qualified charities is too small to take a gift of stock, you can donate that stock to your DAF, avoid the taxes you would incur by selling that asset yourself by selling it through the DAF, and then make the grant directly to the organization.
There are no minimum grants you must write out from a DAF. In fact, many investors are using donor-advised funds like a charitable savings account to simplify their charitable-giving process. There’s a reason Donor-Advised Funds are the fastest growing Charitable Gift Strategy for wealthy investors. By the end of 2017, Americans funded over $85 billion into Donor-Advised Funds. So, this year, put away the checkbook and consider a DAF for your year-end giving.
Contact us to find answers to any of your other charitable planning questions.
This blog content is the property of Ren and is made available for educational purposes as well as to provide a general understanding of different philanthropic strategies. Ren is not engaged in rendering legal, accounting or other professional services. If legal advice or other expertise is required, the services of a competent professional should be sought.
