Charitable giving is often a key pillar of estate and legacy planning for many investors. If philanthropy is important to you, consider the following details of donor advised funds and evaluate if they make sense for your plans to support causes that matter most to you.
What is a donor advised fund? A donor advised fund (DAF) is a monetary fund or charitable account managed and operated by a sponsoring organization, commonly a 501(c)(3) nonprofit, religious or financial entity. Contributors to a DAF make an irrevocable donation to the fund that is managed by an investment professional in accordance with the fund’s longterm goals and objectives. The donor is then able to advise the fund manager on which organizations and grants to allocate the money to.
What can be donated to a DAF? One of the attractive features of a donor advised fund is that multiple appreciating asset types, such as publicly traded securities, mutual funds, restricted stock, and cash, can be donated to the account.
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Why utilize a donor advised fund? In addition to the possible upside on invested assets, potential tax advantages for donors and charities alike are another DAF benefit. Because this type of fund is typically professionally managed and operated by a section 501(c)(3) organization, the donated assets can appreciate taxfree over time, therefore increasing the value of funds that can be distributed to grants and organizations.
Beyond having access to investment professionals, donors can generally take advantage of an immediate tax deduction on the amount of assets contributed, even if the funds are not going to be allocated directly to the intended charitable organizations until future years. Cash contributions are eligible for a 60% deduction of your adjusted gross income. Other assets may be eligible for up to 30% of your adjusted gross income. Be sure to work with a CPA or tax adviser to determine the most effective way to give to a DAF.
What are the downsides of donor advised funds?
There are three main limitations of donor advised funds that are important to keep in mind. To start, there are administrative costs for donor advised funds. The cost for management of different funds can vary, but it is important to understand cost structures to determine
if the benefit of having professional management outweighs any administrative costs.
Depending on the donor advised fund that you chose to utilize, there may be restrictions on the organizations or grants you can support. While donor advised funds allow investors to maintain a relationship with the fund management as an advisor and make recommendations on where to direct the donation, the investment professional will ultimately decide what causes to support.
Lastly, contributions to a donor advised fund are irrevocable. Once you allocate assets to a DAF and a sponsoring organization, they no longer belong to you. It is important to work with a financial professional to determine the appropriate amount and asset types to donate to a fund, so that you can do so with confidence.
A donor advised fund may be an advantageous way to support charitable causes that align with your passions and can ultimately make a difference for those in need. Consult with a financial professional and your tax adviser to determine if a donor advised fund is right for your financial plan
Duane J Lusson, CFP, ChFC, CLU, MSFS, is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Ottumwa, Iowa. He specializes in fee-based financial planning and asset management strategies and has been in practice for 30 years. To contact him,
call 641-684-4200 or stop by his office at 527 W. Second in Ottumwa, Iowa.
Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
Ameriprise Financial cannot guarantee future financial results.
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NOVEMBER Specialty Schedule
Catherine Durflinger, ARNP | Allergy Monday-Thursday, Each Week
Dr. Graeff | Allergy & Pulmonology Tuesday and Wednesday, Each Week
Dr. Homedan/Bradley Hill PA-C | Orthopedics Wednesday, Each Week
Dr. Pitt | General Surgery November 11, 14, and 25
Dr. Whitman | ENT November 1, 15, and 22
Matthew Bednarchik, CRNA | Pain Clinic November 11, 18, 19, 22, and 25
Dr. Ciesemier | Allergy November 8 and 22
Dr. Holte | Podiatry November 15
The Eleventh Day of the Eleventh Month
Veteran’s Day has a special meaning to me. It is a day set aside to honor the men and women that served our country in the armed services. When the troops returned after fighting in World War One and World War Two, parades were held, and the troops were hailed as heroes. When the soldiers and sailors returned during the Viet Nam era, we were scorned and ostracized. The difference was the fighters from the world wars were fighting to protect the free world and won the wars. During Viet Nam, nobody was quite sure why we were fighting, and the military was not allowed to win. The people in charge find it easy to set the rules of engagement since the bullets are not whizzing over their heads. The troops were looked at as disposable
(Outdoors cont’d from pg 3) pawns in an economic battle fought with live ammunition. By the time the long drawn-out conflict ended, most people were thinking the whole thing was pointless. Many mistakes were made, and many lives were lost. Unfortunately, a lot of people blamed the troops for the fiasco. As a member of the armed forces during this period, I can vouch for the fact, we did not make the decisions, did not kill babies, and really did not want any part of it. When we enlisted, we thought it was a patriotic thing to do. As time went on, most people figured out we had been lied to about the purpose of the war. Becoming a civilian again came as a real shock to discover the attitude held by most of the American public. It took me about a week to figure out it was best to not mention where I had been or what I had been doing for the past four years. There are many people I knew for years that did not know I was in the service. Fortunately, things have changed. When our soldiers return from war, whether it is a just war or not, people again welcome them home, knowing their battles were not of their choosing. People realize we need our military to defend our national interests. We just need to be sure to elect
(Outdoors cont’d on pg 5)
(Outdoors cont’d from pg 4) and appoint leaders that are willing to commit the lives of our young people only to causes that are in our national interest. If a situation does call for military intervention, we need to go and win. Let the military leaders fight the war and leave the politicians out of it. Either win it and go home or stay out of the situation altogether.
About ten years ago, my wife and I were in a social setting with a few people we had known for several years. Discussion turned to military service. A guy asked me if I had been in the military. When I answered I had, he said “Thank you for your service.” That was the first time anyone had said that to me. I choked up a bit and had to turn my face away. It meant a lot to me to know someone appreciated that I had served without being accused of killing babies.
People can choose to celebrate Veteran’s Day any way they like. Just remember to thank a veteran. They are the people that keep our country safe, and it is not the individual service members that make the rules on how that is done.
I thank the veterans who protect us and have given so much to their country. To me, Veteran’s Day is a personal thing. I am taking the day off and going hunting.
