Are Donor-Advised Funds The Way to Go?

Charitable planningWhat's the best way to make tax-deductible charitable contributions?

As with anything worth doing, the answer about the best approach to charitable planning never lends itself to one-size-fits planning.  Suitability depends on several factors, such as the recipients of your gift, the kinds of assets you'd like to donate, the size of your gift and your timing.

Many folks take advantage of donor-advised funds (DAFs) to simplify their giving and take an immediate tax deduction. DAFs let the donors set the pace in determining recipients and distributing funds. There are no IRS requirements for minimum annual distributions. These and other features have made DAFs the fastest-growing giving vehicles in the U.S.

DAFs are maintained by major financial institutions like Fidelity and Vanguard. They manage the recordkeeping and tax reporting for a fee. Contributions within these accounts can be invested to the donor’s specifications and grow tax-free.

As far as IRS value calculations, directly donating securities is like donating cash. The charity has to be set up to accept publicly traded or private securities. The donations of securities and other appreciated assets are limited to 30% of adjusted gross income (AGI) and cash donations are limited to 50% of AGI. The same limits apply to DAFs. Moving appreciated stock into a DAF results in the donor taking an immediate tax deduction for its full market value and protection against the tax-dollar hit. DAFs have no payout requirements in terms of timing or funding, so the donor can take time to plan the charitable distributions.

The benefits of direct giving include writing a check, making a contribution with a credit card or donating a used vehicle, which you can do on the last day of the year for tax purposes. Writing a check is still the simplest option for many, but the catch there, is that you have to do the recordkeeping.

If you want to keep your giving as non-public as possible, DAFs are a wise option because the donations are made through the financial entity that holds the DAF. You get to decide whether or not the gift will be acknowledged or if you prefer, you can keep your giving private.

Reference: Kiplinger (November 2016) “Are Donor-Advised Funds the Best Charitable Giving Vehicle for You?”


Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment


We have a LOT more where that came from!

We hate spam too. We will never share or sell your information.

Call Now ButtonCall Us Now https://jsfiddle.net/7h5246b8/

Request a free consultation

We hate spam too. We will never share or sell your information.

We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
  • We launched the rollout of our on-demand webinar early so that new clients and our allied professionals can view the important component parts of ‘an estate plan that works’ at their convenience.  That is available on our website.
  • Live video workshops will be produced as quickly as possible and certainly ahead of our previous schedule; we will keep you posted as these events become available. Given the ‘boutique’ nature of the firm, we rarely have more than ten people in our office including team members at any one time. During this period of ‘social distancing,’ we promise to have no more than 8 people at any time.   This allows us to comply with the Governor’s directive to limit in-person gatherings.
  • The best way to communicate with us is still by phone during regular office hours of 8:30 to 5:00, Monday through Friday, or, you can email any of our team members (that is, their first name followed by @zarembalaw.com).  We will respond to these emails as quickly as possible.
  • Please continue to follow the directives of our local, state, and federal agencies. For your health and in consideration of our team who is assisting you, if you’ve scheduled an office appointment or planned to drop off paperwork and are experiencing a fever, dry cough, or shortness of breath, please contact your primary care doctor for guidance and then our office to reschedule.

Thank you, Walt and the Zaremba Team

Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.