ADVANTAGES OF A DONOR-ADVISED FUND

A donor-advised fund is a way for you to make contributions to your favorite charities by centralizing your charitable dollars in one convenient location.

When you make a contribution to a donor-advised fund, you are making a charitable donation to a 501(c)(3) tax-exempt public charity. Consequently, you are entitled to receive the maximum tax deduction allowed by law and are not required to pay capital gains taxes for gifts of long-term appreciated securities.

Why use a donor-advised fund rather than make gifts directly to charities?

With a donor-advised fund you can:

• Time your charitable giving to meet your needs.
  • You receive an immediate tax deduction at the time a contribution is made to your fund, but you may recommend grants to charities without the pressure of year-end deadlines.

• Experience many of the benefits of a private foundation without the tax burdens or administrative and reporting responsibilities. Advantages over a private foundation include:
  • Higher limits on deductible contributions

  • No annual 5% payout requirement

  • No tax on investment income

  • No separate annual filing with the IRS or state

  • Minimal administrative fees

• Involve family members in your philanthropic planning by designating children and grandchildren as recommenders and successor recommenders to your fund

• Use your fund in conjunction with other estate planning tools such as charitable remainder trusts, charitable lead trusts, bequests, and insurance policies

• Carry out your charitable giving anonymously, if you so desire.

When does it make sense to consider a donor-advised fund?

• When you give to multiple charities each year and prefer not to track receipts

• When you have highly appreciated securities and want to avoid paying capital gains taxes

• When you are contemplating the sale or liquidation of a business and want to reduce your tax liability

• When you give charitable donations to a variety of organizations and are too busy to worry about tracking receipts

• When you have a small private foundation and want to eliminate the paperwork and expense

• When you want to pass on a legacy of charitable giving to your children.