With a donor-advised fund, you can invest today and make a bigger impact tomorrow.
Tax Benefits and Restrictions
What makes a DAF unique is that it is so flexible. It is regarded as a fully qualified charity under IRS regulations. You get a tax deduction for donations to the fund in the year you make them, and when you want to grant money from the fund to a charitable organization such as your favorite Valley charity, you simply make a request to the DAF to issue a grant.
It is important to note that you lose control over the money deposited into your DAF. This means that when you request that a grant be made to a charitable organization, you are advising or recommending that the grant go to that charity. In return for giving up control and transferring the ownership of your gift to the DAF sponsor, you receive a potential tax deduction to reduce your personal tax liability. You should read all the documentation to set up a DAF, such as the terms and conditions for opening a DAF account, minimum account balances, possible restrictions on approved charities, beneficiary designations, and prescribed investment opportunities. Many of the DAFs that give you an option to invest your funds offer another benefit: Any appreciation gains on those investments are tax-free.
In our experience, when a donor has requested that a DAF grant be made to your favorite Valley charity, it has been approved.
Streamlined Giving
Many of our supporters have found the DAF to be a very attractive option for managing their charitable objectives and making gifts to your favorite Valley charity. For one, they are easy to use - opening an account takes just 15 minutes online, and most DAFs have the online capability to manage donations, investment options, and grant requests. Through a DAF, statements of your charitable activities are consolidated in a single place. DAF grants of almost any size can be recommended to most charities across the country, and, in many cases, around the world. Many philanthropists use DAFs to make non-cash charitable donations, including contributions of real estate, privately held business interests, cryptocurrency, and more.
As with all decisions on taxable activities and financial planning, we encourage you to consult with your advisors if setting up a DAF makes sense for your charitable planning.
Over the last several years, donor-advised funds at Fidelity Charitable Gift Fund, Schwab Charitable, Vanguard Charitable, National Philanthropic Trust and other charities such as your local community foundation have exploded in popularity. If you have made charitable gifts to a donor-advised fund, you have already designated those assets for charity. You now have the option to allow those resources to go to the sponsoring charity of the donor-advised fund when your fund terminates, or designate your favorite Valley charity to receive the balance left in the account when you no longer will be making gifts from the fund.
When you give to your favorite Valley charity, you can designate how your gift will be used and create a lasting, meaningful legacy. Best of all, because these assets were already designated for charity, your gift won't take anything away from your heirs.
