Are you looking for a different way to give to your favorite charities? If you are, consider a donor-advised fund. Donor-advised funds are growing methods of giving to charities – with over $78.64 billion in donor-advised funds in 2015.
Donor-Advised Fund Basics
A donor-advised fund, or DAF, allows you to make a contribution (or series of contributions) to the fund and recommend what charities you would like to receive your donation. A sponsoring organization oversees the fund and has final say as to how they distribute the funds, but generally, the sponsoring organization follows the donor’s recommendations for which charities receive the funds.
Benefits of Donor-Advised Funds
Donor-advised funds are a popular option for charitable giving because they offer several attractive benefits: relatively modest contribution guidelines, little to no set-up costs, few ongoing responsibilities, name recognition (if desired) and the ability to consolidate contributions and make a greater impact.
Tax Benefits of Donor-Advised Funds
As a contributor to a donor-advised fund, you can potentially take advantage of these tax breaks:
- An immediate deduction reducing your federal taxable income*
- Avoidance of capital gains taxes on appreciated assets you donate directly to the fund
- A reduction in the taxable value of your estate, potentially saving future estate taxes
Do Your Research
If you are interested in setting up a donor-advised fund, do your homework and talk to a professional. Make sure you understand the minimum contribution requirements to establish a donor-advised fund, any grant restrictions, potential fees and services offered to help donors. And find out whether the fund will continue in perpetuity or end when you die.
To learn more about donor-advised funds, contact a Fifth Third Bank advisor.