Make the Most of Your Charitable Giving with a Donor Advised Fund

There are a variety of reliable ways that you can choose to invest or donate your money.

Ambassador Advisors strives to fully understand your short-, mid- and long-term goals and objectives when we offer suggestions on investment decisions. Often the question arises as to what might be the most straightforward way that our clients can do the most good and, at the same time, see an immediate benefit from a donation to a charitable cause. Depending what your investment goals may be, we might suggest that you set up a donor-advised fund account as an efficient, straightforward way to make the most of your assets when tax-planning season approaches.

Why are donor-advised funds an excellent way to go? One of the first things we like to mention to our clients is that they are donor friendly. It is a unique way for you to turn your financial assets into a tax-deductible donation that you can disperse on a schedule that makes sense for you. In other words, you can get full donation credit, now, for gifts that you might disperse over several years.

When dealing with public charities, a donor can lose control of their assets as soon as the check is written. But with a donor advised fund account this is not the case. You will retain some control over your donation while at the same time making sure it’s used for a specific purpose that suits your wants and needs. It gives you or control over how your money is distributed and the oversight that is maintained is reassuring to donors who want to make sure their financial commitment has the highest sustained impact.

Donors using this type of fund can deposit cash, appreciated securities or other assets, and then distribute the money over time. Perhaps even more powerful, Donor Advised Funds can go on for generations and anyone who donates to the fund get full tax deductibility. Funds can set up intergenerational stewardship opportunities in which the family’s values are clearly defined and carried forward.

An excellent example of why this fund may be attractive is, for example, if you have a spike in income for a particular year, you can donate the entire amount from that year and reap the tax benefits but let the fund grow instead of giving them all away immediately. As that fund grows, you can determine how that money will be given in the future. In short, you get the tax deduction up front, and you have time to decide how you want to disperse your giving.

According to the IRS, a donor-advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization or a sponsoring organization. The charity will have legal oversight over the fund, but you the donor will maintain advisory privileges.

Historically, charitable giving rises about one-third as fast as the stock market with approximately 91% of all high-net worth households giving to charity. In 2016, 32% of charitable dollars went to religious foundations with the next highest amount, 16%, going to educational foundations. Environment and animal charities; arts, culture and humanities organizations; international affairs nonprofits; and health causes regularly experience the largest jumps in contributions from year to year.

In 2017, the largest source of charitable giving came from individuals, at $281.86 billion (72% of total giving). Trends show no slowdown, and that makes understanding the benefits of opening a donor-advised fund for your preferred public charity a smart play.

Contact Ambassador Advisors today, and we will help you find the right way to protect both you and your investments.

Sources

https://nonprofitssource.com/online-giving-statistics/
Charitable Giving Statistics | NPTrust. https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/
2018 Online Giving Statistics, Trends & Data: The Ultimate …. https://nonprofitssource.com/online-giving-statistics/
https://www.cnbc.com/2014/12/15/the-pros-and-cons-of-donor-advised-funds.html

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purposes of avoiding penalties that may be imposed by law. Each tax payer should seek tax, legal or accounting advice from a tax professional based on his/her individual circumstances.