What are the Benefits of Using a Donor Advised Fund for Charitable Giving?

December 19, 2023

Unlock the power of philanthropy with Donor Advised Funds (DAFs)!

Experience Tax Efficiency: Maximize your impact by receiving a tax deduction when you contribute to a DAF. Lump your itemized deductions in one high-income year or offset capital gains effortlessly.

Embrace Privacy: Elevate your charitable giving with an extra layer of anonymity. DAFs ensure that when recommending grants, it's the DAF sponsor issuing checks to charities, safeguarding your privacy.

Build a Lasting Legacy: Involve your family in philanthropy with DAFs. Name successors, like children or other family members, to continue your charitable legacy. Foster a sense of giving within your family and let them carry on your impactful work.

Gift Appreciated Assets: Simplify your giving by using DAFs to donate stocks and other appreciated assets to your chosen charity. A streamlined process for making a lasting difference.

Conclusion: Donor Advised Funds offer flexibility, tax efficiency, and simplicity in managing your philanthropy. Make an informed decision about your charitable giving strategy and create a lasting impact!

Full Transcript:

Hello, welcome to Arista Advice! Question of the week is: "Paul, what are the benefits of using a Donor Advised Fund for charitable giving?" A Donor Advised Fund is a great thing to consider at the end of the year and/or any time of the year. The question is asked, why should we consider one?

A Donor Advised Fund is a vehicle where you can gift low-cost basis into it or give charitably or philanthropically into the Donor Advised Fund, and you get a deduction for the current year that you make that contribution.

Another benefit is privacy. If you value privacy in your charitable giving, a Donor Advised Fund provides a shelter of privacy in you giving to organizations. It's an extra layer of anonymity. When you make contributions to a deserving organization or grants through the Donor Advised Fund, it's the Donor Advised Fund sponsor name that's attributed.
A third layer is legacy and family involvement. When a Donor Advised Fund is created, it enables you and other members of the family to participate in the contribution and the distribution of assets from a Donor Advised Fund.
Fourth is gifting stock and other appreciated assets. If you have a low-cost basis on an asset or you have a large quantity of an asset, you can gift that asset into your Donor Advised Fund. You can create and name your own Donor Advised Fund. We recommend Fidelity Donor Charitable Advised Funds. It's a $54 billion fund that many families and individuals, retirees, business owners, and other great people that have donated assets into that fund to take advantage of some great benefits with their gifting.

As you'll see in this chart, here's an illustration to show how the Donor Advised Fund works. A donor gives cash or other assets, even business interest, into the fund, and then the donor receives a checkbook or wiring instructions to wire funds from the fund to a deserving charity, houses of worship, universities, colleges, and to many other 501(c)(3) and 501(c) deserving organizations. Donor Advised Funds are a super valuable vehicle to look at, consider, and do research on to see if it's appropriate for you.

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