Leveraging Your Charitable Giving with Donor Advised Funds

Here are 3 ways establishing a donor advised fund (DAF) can leverage your charitable giving to go further and last longer:

  1. Establish a DAF now with a large gift and parcel out donations over the years. Why would you want to do this?
    • Maybe you’re trying to liquidate a low basis asset (like securities or real estate) and don’t want to recognize the gain, but you don’t want the full liquidation value going to just one charity, or you want the liquidation value to satisfy your charitable giving goals over multiple years.
    • Maybe you need to offset a unique taxable event like a sale of a business.
    • Maybe you want to “bunch” donations for income tax purposes (in light of the increased standard deductions).
  2. Establish a DAF now to consolidate gifts from family members. Why would you want to do this?
    • The sum of the whole is greater than its parts.
    • In order to create a family legacy.
    • In order to encourage philanthropy in subsequent generations.
  3. Seed a DAF now and make a bequest to it as part of your testamentary plan.
    • This allows a “wait and see” approach as to the value of the gift to ensure you have assets available for your expenses and enjoyment during your life.
    • Depending on the estate tax climate, can be expressed as a formula gift to offset any estate taxes.
    • This can be a solution to a small family tree.
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