Point & Click Philanthropy: The Donor Advised Fund
This article originally appeared in Your Family CFO Report, July 2013.
One of the ways we help our clients handle their financial affairs is to assure that if they are gifting, they are doing so tax efficiently and is the easiest way possible.
Ninety-five percent of wealthy households give to at least one charity annually. Often, these gifts are completed during the last weeks of the year, in conjunction with year-end tax planning, so that households can maximize the benefits of giving. The sense of urgency that comes as the December 31 deadline approaches often leaves the charitably inclined scrambling to get donations finalized, or even find a charity to receive another gift.
What if there was an easier, less stressful way to plan giving?
Utilizing a Donor Advised Fund (DAF) provides an investment vehicle for the charitably inclined to establish a purposeful plan for their giving. The DAF is a convenient way to put away money for charity, allow it to grow, and then give it away over time. Charitable Giving, through the Donor Advised Fund, becomes a whole separate planning opportunity for many affluent families. Because the tax deduction is immediate when the irrevocable transfer is made to the account, clients/donor are no longer clamoring to make their donations by December 31.
Then, throughout the year, the fund owner can determine what causes to support, control the timing of grants, and recommend specific amounts to any IRS-approved 501(c)(3) public charity. The recordkeeping for the donor advised fund is in one central location, and eliminates the need to save receipts, write checks, and make copies for your accountant. All of this can be managed at any time, from any place, with a few clicks of your mouse.
Smith and Howard Wealth Management currently recommends the use of Community Foundation of Greater Atlanta and/or the Schwab Charitable Fund for our charitably inclined clients that are looking for a way to streamline their charitable gifting while maximizing their tax benefit. Contact us at 404-874-6244 to begin the process and establish your Donor Advised Fund.