Mar 2013
27

Donor Advised Funds (DAF)

By Luke Collova
March 27, 2013

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Have you ever thought about making a charitable donation but want to give to several different charities?  Navigating the paper work for each individual charity and its restrictions on what can be donated can prove to be no small task.  What if you could donate to a single fund and then have it gifted out to all of the charities you choose in a streamlined fashion at the time and in the amount of your choice?  And, what if you could take your tax deduction now, but invest the fund and allow the fund to appreciate before you distribute it to the charities?  Well if this appeals to you then a DAF may be the answer.  Here are some key characteristics to note about these funds:

  • Generally $5-10k minimum donation
  • Tax deductible at time of donation (contribution to fund)
  • Donations are irrevocable 
  • Can donate cash, securities, shares of funds etc.
  • No capital gains tax when an appreciated investment is donated.  For example: a stock was purchased for $10,000 and has appreciated to $15,000 at which time it is donated into a DAF, the investor gets a $15,000 deduction and does not owe capital gains tax on the $5,000 profit.
  • DAF contributions are not subject to estate taxes or probate
  • Donor can advise on how the money is invested while in the fund
  • Donor advises when, how much and to which qualified charity(s) the grants are made
  • Donor can involve children/successors both for grant choices but also to take control when donor passes
  • There is a minimum required grant amount from the fund annually but typically it is very small (e.g. $250)
  • Administration fees are typically around 1% (The fund we would use is .6%)
  • DAF can simplify the process of giving to numerous charities as the donor doesn’t have to complete full paper work for each and is not restricted by each charity’s rules on what can be donated 

As we move towards the end of tax season, you may be asking yourself if a Donor Advised Fund is the right vehicle for you for future giving needs.  If you’d like to discuss the potential benefits, give us a call, and we will review the details in light of your specific objectives.

This entry was posted on Wednesday, March 27th, 2013 at 04:08 pm and is filed under BlogGivingPlanning Perspectives. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

 

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bio3Joe Day, CFA is the Founder of Bear Mountain Capital. Joe started the company after spending many years advising high net worth clients with a leading global wealth management firm. Joe earned the right to use the CFA designation from the CFA Institute in 2011. He also holds a degree in Business Administration, with a Major in Finance from Gonzaga University.

Luke Collova is an Investment Advisor Representative for Bear Mountain Capital focusing on planning, investment strategy, client development and operational support. Luke’s prior career included providing commercial insurance coverage for a global insurance firm. Luke maintains his Series 65 license and holds a degree in Business Administration, with an emphasis on Finance and International Business from the University of Puget Sound.