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Social Security Workshop 2018 (Presentation (169)) (42)

What Is a Donor-Advised Fund (DAF)?

What Is a Donor-Advised Fund (DAF)?

What is a Donor-Advised Fund?

A donor-advised fund (DAF) is a charitable giving vehicle that allows you to grow and give assets to charities. A DAF is a most convenient and tax-efficient way to give back. With a DAF, you are able to contribute cash or long-term appreciated assets to the account and receive an immediate tax deduction. Assets inside of the DAF grow tax-free, and you can diversify the assets without any tax consequences. You may donate assets such as mutual funds, stock, real estate, and/or closely held business interests.

DAF Handout, Implementation - REVAMP

Is DAF Right for Me?

  • You give to charity regularly and have appreciated assets that you would like to avoid paying capital gains on. With a DAF, instead of using after-tax dollars (check/cash/credit card), you can use appreciated assets (held for more than one year) more to get a tax deduction equal to their fair market value. This also allows you (and the charities) to avoid paying capital gains taxes.
  • You would like to organize your charitable giving in one easy-to-use account. With a DAF, you have a designated account and site to do your charitable gifting from. You are able to make gifts at any time, and you can even set up recurring payments.
  • You would like to build and pass on a charitable endowment. After contributions are made in a DAF, you are not required to gift from the account at any given point. This allows you to build assets within the fund to make large one-time gifts or to pass a charitable legacy on to the next generation.
  • You expect to give in the future but have a high-income year where you would benefit from a large tax deduction. By leveraging a DAF, you may contribute a lump sum in a year when you expect to have a large tax liability from a bonus or business payout, for example. Doing so allows you to frontload your future donations to obtain the tax deduction in the high-tax liability year.
  • You give to charity but do not itemize deductions. You may deposit a lump sum for your future gifting needs to itemize your deductions and reduce your overall tax bill.

Click here to view & download the complete Donor-Advised Fund handout.

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