Donor-Advised Funds: A Different Way to Give to Charity

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.

The information contained herein is for information purposes only, is not designed to address your financial situation or particular needs and does not constitute the rendering of tax or legal advice. You should consult with your tax advisor or attorney for advice pertinent to your personal situation. Asset Allocation, Alternative Investment and Hedging/Diversification strategies are intended to mitigate the overall risk within your portfolio. Some strategies may be subject to a higher degree of market risk than others. An investor should understand the costs, cash flows and risks inherent in a strategy prior to making any investment decision. There are no guarantees that any strategy presented will perform as intended. Fifth Third Private Bank is a division of Fifth Third Bank offering banking, investment and insurance products and services. Fifth Third Bancorp provides access to investments and investment services through various subsidiaries, including Fifth Third Securities. Fifth Third Securities is the trade name used by Fifth Third Securities, Inc., member FINRA/SIPC, a registered broker-dealer and registered investment advisor. Registration does not imply a certain level of skill or training.

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