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“Got Enough in Your Savings Account?... Open a Giving Account.”
Donor-Advised Funds for Charitable Giving
A donor-advised fund is a like a bank account for charitable giving, which you open under the auspices of a parent foundation. For a yearly management fee, the parent foundation's staff takes care of all the administration of your account. Money you put into your fund is immediately counted as a charitable contribution for tax purposes-but then, you may take whatever time you need to decide which groups to give to from the fund. Once you decide, simply tell the parent foundation where to write the checks. It's like starting your own foundation, with zero administrative hassle.
- As with giving to any public charity, you may deduct up to 50 percent of your gross income for cash contributions, or up to 30 percent of contributions of appreciated stock or other property you have that has increased in value.
- As soon as the money is put into the fund, all the income it produces from investments is no longer taxable. Moreover, if any of the investments in your fund are sold, there are no capital gains taxes to pay. Thus, the donor advised fund "shelters" money invested in the fund so that what you would have paid in various taxes you now have available for your giving.
- Experienced staff administer the fund, including handling investments, paperwork, filing with the IRS, and following up with grantees. You can give anonymously (if you wish to). In addition, the staff often provides valuable information about projects you may be interested in.
- The parent foundation owns the assets of the fund and has the final authority. Take care to select a parent foundation that truly has a compatible mission and check out restrictions to what you can and can not do.
- You may donate through the fund only to tax-exempt organizations (or organizations that have a tax-exempt sponsoring organization).
- Most donor-advised funds do not allow the funders to receive compensation for their services or reimbursement for expenses.
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