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How Donor-Advised Funds Benefit Your Contributions
How Donor-Advised Funds Benefit Your Contributions
If you’re feeling the need to make a charitable donation right now, you’re likely not alone. It’s a hard time for many, and if you are financially able, giving to charity may help you feel like you’re making a difference during such an uncertain time. Charitably minded investors have several options to choose from when it comes to donations, including donor-advised funds (DAFs).
Opening and funding
DAFs can be opened with as little as $5,000 through a local community foundation, such as the North Texas Community Foundation based right here in Fort Worth, or another sponsoring organization.
Funded by cash or other assets, donor-advised fund contributions are no longer yours after you’ve donated. However, you have the opportunity to decide when donations are distributed and which charities they go to. There is no requirement for distribution, so funds may sit unused for years, yet the donor receives a tax write-off for assets contributed right away. The investments within the fund, level of risk, and general investment strategy are all determined by the donor.
Additionally, the sponsoring organization becomes the donor of record, so DAFs are an especially good option for those who prefer to make anonymous contributions. Some even allow active involvement from an advisor.
Benefits of donor-advised funds
Due to the current state of the markets, some investors may have highly appreciated assets that would be a sizable tax liability if they decided to sell them. Instead of selling and paying taxes on the assets, if these investors are charitably inclined, putting them into a donor-advised fund has three key benefits:
● The donor receives a tax deduction.
● There are no capital gain taxes.
● The chosen charities fully benefit from the funds.
The impact of the pandemic has left many facing an uncertain financial future, so new donor-advised fund candidates may feel like they can’t afford donating at this time, even when there is a need. But those who already have a DAF set up have a wonderful opportunity to make a difference. There’s no need to be hesitant about distributing more than you would in a normal year — it’s a chance to give quickly and generously to the charities closest to your heart.
To learn more about donor-advised funds, other charitable contribution options, or if you need assistance with trust and estate planning, please contact me via email ([email protected]) or phone (817-502-3586), or reach out to any of our Argent Trust Company professionals at 817-502-2931. We are here to help.
About the author: Kathy Christoffel serves as market president for Argent Trust Company’s Fort Worth wealth management team, where she oversees business development and provides client solutions. A certified trust and financial advisor, Kathy has 28 years of experience as a trust and wealth management professional. She is also involved with several professional organizations, including the American Bankers Association, Tarrant County Probate Bar, and Institute of Certified Bankers.
