UNLOCK greater giving WITH A DONOR-ADVISED FUND

By Kellie Smith, CAP® Director, Foundation

How does a donor-advised fund work?

A donor-advised fund, or DAF, is a charitable investment account where you can deposit cash, securities, and other assets. These accounts come with a multitude of advantages and allow donors to grow the amount of money they have to give away by investing their contributions, while simultaneously receiving immediate tax benefits from them.

Giving through a donor-advised fund rather than contributing directly to charity has become more popular than ever, with the number of individual DAF accounts reaching 1 million in 2020 according to the National Philanthropic Trust. One presumable reason for the recent rise in DAFs is the 2017 federal income tax law change which substantially increased the standard deduction. With this change, the donor-advised fund makes even more sense. Typically, taking the standard deduction when itemizing deductions (including charitable donations) would amount to less; however, with a donor-advised fund, you have the tax advantage of being able to “bundle” multiple years’ worth of donations in one year and then choose to allocate those funds over multiple years.

What are the other benefits to giving through a donor-advised fund?

Simplifying your record-keeping: One of the most obvious perks of a DAF account is the ability to organize and streamline your giving through one source and consolidate all your donation records into one tax receipt at the end of the year.

Increasing your generosity: A DAF maximizes your giving power by utilizing a tax-free, long-term investment strategy. Like any investment, the money has the potential to grow while in the fund.

Reducing your capital gains and estate taxes: By using a donor-advised fund, you’ll avoid paying capital gains tax on the assets you allocate toward it, which may increase the amount available for charity by up to 20 percent. Plus, your deductions could increase; if you bought an asset for less than it’s worth today, you can deduct its current market value instead of the original price. Designating successors to perpetuate your legacy: You can name your children, grandchildren, or others as successor advisors to your fund. Successor advisors have the privilege of managing your fund after your death and continue the mitzvah of giving!

How do I get started?

Donor-advised funds are a flexible, efficient, donor-centric form of philanthropy and this opportunity isn’t just reserved for the wealthy. You can open a donor-advised fund with the Jewish Foundation at any time. Most importantly, by creating your DAF with the Jewish Foundation you are supporting the growth of our Jewish community through the small, shared fees that we derive from the management of your fund. Your partnership enables us to provide philanthropic education programs to help inform current donors about critical issues within the community and develop the next generation of givers. Opening a fund and creating a legacy within the Jewish Foundation helps to preserve a thriving Jewish Life in Northeast Florida for generations to come.

Contact Kellie Smith, Foundation Director and Chartered Advisor in Philanthropy, at KellieK@ jewishjacksonville.org or 904-512-3796 to open a donor-advised fund and unlock greater giving today!

This article is only intended to be a general overview of some donation considerations and is not intended to provide tax or legal guidance. In addition, all gifts to donor-advised funds are irrevocable. Please consult with your tax or legal advisor.

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