Donor advised funds (DAFs) are the fastest growing charitable vehicle in America today. In conversations with members of the neverthirst family, we’ve learned that DAFs are being discovered by many, and can be a incredible way to maximize generosity while receiving certain tax benefits.
What is a Donor Advised Fund?
A donor advised fund is a philanthropic vehicle that allows individuals or organizations to make charitable contributions and receive an immediate tax deduction for the full amount of the donation. The funds contributed to the DAF remain under your control until you recommend how the funds are to be distributed to eligible charities, either immediately or over time. Donor advised funds are typically sponsored by financial institutions or other nonprofit organizations, such as The Signatry or National Christian Foundation.
7 Benefits of Having a Donor Advised Fund
- Tax Benefits: When you contribute to a DAF, you receive an immediate tax deduction for the full amount of the donation. This can help reduce your taxable income for the year and potentially lower your tax bill.
- Make Larger Gifts: One of the primary benefits of using a DAF is that it allows you to make large gifts without having to worry about how much money you have left in bank accounts after making those gifts. As you invest in a DAF over time, you can then contribute larger amounts than you maybe could at one-time previously.
- Flexibility: Donor advised funds can provide your family with the flexibility to support the causes you care about most. You can make contributions to a DAF at any time and then recommend grants to your favorite charities whenever you choose. This can be especially beneficial for if your family wants to support multiple charities or wants to make a significant gift but is not yet sure where to give.
- Simplified Record Keeping: Donor advised funds can simplify your record keeping for charitable giving. Instead of keeping track of multiple donations to different organizations, you can make one contribution to your DAF and then recommend grants to multiple charities from that fund. This can make it easier to track giving and simplify tax reporting.
- Legacy Planning: You can name your DAF as a beneficiary in your will or estate plan, allowing your generosity to continue on. This can be a meaningful way to leave a lasting impact on the causes you care about most.
- Complex Asset Giving: Donor advised funds can help you leverage your giving through donating stocks, real estate, closely held business interest, cryptocurrency, and more. Additionally, capital gains tax is often avoided for assets contributed to a DAF.
- Anonymity: Using a donor advised fund allows you to give without having any direct contact with recipients or charities themselves — which may be important if you prefer anonymity in your giving or if you don't want any potential conflict of interest between yourself and the organizations receiving donations from your fund.
How to Set Up a Donor Advised Fund
To set up a donor advised fund, you can work with a sponsoring organization, such as The Signatry or National Christian Foundation, or your financial advisor may share other options with you. Some of these organizations may have minimum contribution requirements or charge administrative fees, so it is important to research different options before selecting a sponsor.
Donor advised funds are most beneficial for families who give $10,000 or more a year towards charitable causes. If you are interested in setting up a donor advised fund, be sure to research different sponsoring organizations, or speak with your financial advisor to determine if it is the right philanthropic tool for you.
Your financial advisor, The Signatry, or National Christian Foundation can explain in greater detail the benefits of a DAF and how they work.
Giving through a DAF to neverthirst
Many members of the neverthirst family give through donor advised funds, hosted through NCF, The Signatry, and other institutions. You can choose anonymity in your giving or let us know of your gift so we can show you the later impact of your giving. Share your contact information and project preference (see project options here) in the memo so we can place your giving where you intend. These donor advised funds can be a great tool if your family is looking to minimize taxes, simplify record-keeping, and maximize generosity.
Disclaimer: neverthirst does not provide financial, tax, legal, or other professional advice. Please consult professional advisors concerning the financial, tax, or legal consequences of your giving.