If you are looking to make charitable giving a part of your personal planning, understanding the role a DAF can play is a helpful place to start, according to Evensky & Katz/Foldes Wealth Management.
A donor-advised fund, or DAF, is a giving account established at a public charity.
It allows donors to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time. Donors can contribute to the fund as frequently as they like, and then recommend grants to their favorite charitable organizations whenever it makes sense for them.
Benefits of a DAF
- Maximize tax benefits.
- Contribute immediately, build a philanthropic strategy and donate when you’re ready.
- Grow your contributions over time, making more charitable dollars available to nonprofits.
- Guarantee philanthropic dollars reach the causes you care about with an irrevocable contribution.
- Simplify organization and administration.
- Create a charitable legacy.
- Choose how you are acknowledged.
- Develop a philanthropic vision and philosophy.
- Reach international charities and NGOs while still receiving a federal tax credit.
If you are looking to make charitable giving a part of your personal planning, understanding the role a DAF can play is a helpful place to start.
Consider strategic giving when you:
- Want to make a large charitable gift to offset your tax liability.
- Intend to make numerous and substantial charitable gifts upon your death.
- Typically claim the standard deduction.
- Want to retain control of the timing of the charitable distribution.
To help you frame the decision regarding whether a donor-advised fund is right for your situation, here is this flowchart that can help. You’ll find that donor-advised funds can enable you to optimize your tax planning while simultaneously streamlining and fulfilling your philanthropic goals.
If the idea of a donor-advised fund is appealing to you, the next step is to bring the conversation to your advisor. Your team can help assure this all is properly coordinated.
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