Donor-Advised Funds: Are they right for you?

The Donor-Advised Fund (DAF) is the fastest-growing charitable vehicle in the United States today because it offers excellent tax saving options, great flexibility, and complete anonymity.

This tool is also great for turning complex assets, such as real estate, business interests, or oil & gas, into tax-efficient funding for your favorite ministries that may not be able to accept these types of gifts directly.

What Are Donor-Advised Funds?

Making the decision to donate to your favorite charity is usually an easy decision. When you think about a cause you are passionate about, it is likely to bring a smile to your face knowing a real impact is being made. Planning how to give wisely to your favorite charity, however, is often a different story. Very commonly this requires a review of your overall financial picture, including markets, available cash, tax deductions, and other variables.

What if you could maximize your gifts to your favorite charity, ministry, or local church while making the process of giving easier than ever?

How a Donor-Advised Fund Works

  1. You make an initial, irrevocable gift of cash, stock, or a complex asset to fund a DAF at a brokerage firm, community foundation, mutual fund company, or Christian organization.
  2. You receive an immediate tax deduction for your gift.
  3. The assets in your DAF can grow tax-free, either by money-market returns or selecting to have the funds invested.
  4. On your advisement, grants are sent to your favorite ministries whenever you like, with no annual requirement or minimum distribution from the fund.

Benefits of a Donor-Advised Fund

  • Establish an easy and flexible vehicle for charitable giving
  • Maximize your gift by taking advantage of the tax-avoiding ways to give using a DAF
  • Make an immediate gift to receive a tax deduction in the current year, and have the option to distribute the funds later
  • Support multiple charities while receiving a single receipt at the time you fund your DAF
  • You can add additional advisors to your DAF to create a legacy fund that your children can make grants from for years to come

Donor-Advised Funds Provide Convenience:

Using a Donor-Advised Fund (DAF) can be incredibly helpful and may be the answer you are looking for. The sole purpose of this fund is to support qualified charitable organizations that you believe in. At your discretion, you advise the fund to direct gifts to the charities of your choice.

DAFs can be set up with community foundations and many brokerage firms, mutual fund companies, or Christian organizations. Instead of giving directly to your favorite charity, you make the gift into your fund which is held within the non-profit organization. The funds can be invested for growth or held in cash, and grants can be sent out immediately, over months, years, or can even be set up as an endowment. And the best part, you’ll only receive one charitable tax receipt in the year you make the donation to your fund.

Additionally, as with all cash (or stock) gifts, you receive a current year charitable tax deduction for the gift, if you itemize. DAFs are a great vehicle for turning complex assets, like real estate or business interest, into funding for your favorites charities as well.

Tax Planning Benefits:

Giving to a DAF can be a very strategic tax planning opportunity for individuals who wish to offset a high-income year with a proportional deduction, or for those who would like to avoid paying capital gains on appreciated stock. Both scenarios provide tax incentives as well as the flexibility to control when the grants are made to charity. Strategic giving results in more dollars going to fund ministry instead of going to taxes.

Focus on the Family receives DAF grants from friends of the ministry just like you and our Planned Giving team would be happy to discuss this option with you in more detail. Whether you have a fund that has been set up for years or you are just starting the process, we are happy to discuss how you can support the ministry and kingdom causes you truly care about through a DAF.

Donor-Advised Funds vs. Private Foundations

A Donor-Advised Fund has several advantages when compared to a private foundation. The start-up time and cost are minimal for DAFs, and gifts to DAFs are generally deductible at fair market value. A DAF is also not subject to the distribution requirements and certain excise taxes faced by private foundation. Additionally, grants made through a DAF can be completely anonymous.

Contact our Planned Giving Team at: 800-782-8227 -or- [email protected]

Disclaimer: Focus on the Family does not provide legal, tax, financial, or other professional advice. You should consult professional advisors concerning the legal, tax, or financial consequences of your charitable activities.

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800-782-8227

Mon - Fri: 8am - 5pm MST

Focus on the Family
Attn: Planned Giving
8605 Explorer Drive
Colorado Springs, CO 80920

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