The Season of Giving and Your Donor Advised Fund
It’s the most wonderful time of the year with Thanksgiving and Christmas rapidly approaching, and these favorite holidays of ours will be here before we know it! I’m always in awe this time of the year when people donate their time and resources to causes that are important to them – especially for those of us less fortunate that need acts of kindness the most.
One thing most people don’t know about, and something I deal with often with clients, is the financial upside of a Donor Advised Fund (DAF) during our heightened commitment to donating to charities throughout the holiday season. So, what do you need to know about DAFs? I go into some details below you should be aware of to make the most of your charitable service:
A DAF is an account held through a sponsoring public charity for accepting charitable gifts. The benefits of of DAFs are vast in scope.
These can include, but not limited to, concentrated stock positions with several options to mitigate risk associated with owning DAF shares, an income tax deduction equal to your DAFs shares’ fair market value, the selling of your DAF shares without incurring capital gains taxes, and the opportunity to pool charitable funds that can be directed to support various charitable organizations – to name a few.
DAFs are an attractive option because of their ease, convenience, and overall financial benefits.
One strategy could be bunching your charitable contributions into one year so that they may be tax deductible. Due to the limit of state and local income tax deductions, more and more people are taking the standard deduction rather than itemizing. So, your charitable donations may no longer have a tax benefit to you. In other words, if you consistently give a certain amount to a charity or charities each year, you may consider making a larger donation to the DAF in one year, receive the tax deduction, and then the subsequent donations to the ultimate charity/charities in the years to come.
If you are thinking about donating to charities during this time of year and are looking for a financial benefit in doing so, I’d be happy to talk with you. Reach out if you’re interested!
~ Presented by Charles Stewart