Maximizing Charitable Giving Through Donor-Advised Funds

In the world of philanthropy and legacy planning, donor-advised funds (DAFs) have emerged as a powerful tool for maximizing charitable impact while offering significant tax benefits. A DAF is essentially a charitable investment account that allows you to contribute cash, securities, or other assets, receive an immediate tax deduction, and then recommend grants to your favorite charities over time.

One of the primary advantages of DAFs is the ability to “bunch” multiple years’ worth of charitable contributions into a single tax year. This strategy can be particularly beneficial if you’re close to the threshold for itemizing deductions. By consolidating several years of giving into one large contribution to a DAF, you may be able to itemize deductions in that year and take the standard deduction in subsequent years.

Another key benefit is the potential for tax-free growth. Once you’ve contributed to a DAF, the funds can be invested and grow tax-free, potentially increasing the amount available for charitable giving. This feature makes DAFs an excellent vehicle for legacy planning, as you can contribute appreciated assets during your lifetime and avoid capital gains taxes while creating a lasting charitable legacy.

DAFs also offer flexibility in timing your charitable giving. You can make contributions to the fund when it’s most tax-advantageous for you, and then take your time deciding which charities to support. This separation of the tax event from the charitable distribution allows for more strategic giving over time.

How does the Foundation Compare to National Financial Institutions?

The Foundation offers donor-advised fund holders the same tax and administrative benefits as a national financial institution, including:

• Online access to view fund balances, contributions, and grants
• Simple process for requesting grants to your favorite charities
• Streamlined tax reporting, often represented by just one letter to provide to an accountant at tax time, even when the donor-advised fund is used to support dozens of individual charities throughout the year
• All back-office administration, tax receipts, recordkeeping, and other requirements for the donor-advised fund’s 501(c)(3) status
• Favorable tax-deductibility of contributions to the fund

Unlike standard donor-advised funds held at national financial institutions the Foundation offers:

• Concierge-level service. You will never speak to a call center
• In-house experts who have a finger on the pulse of community needs, the strengths of specific nonprofits for the highest possible community impact
• Opportunities to collaborate with other donors who care about similar issues and forums to tap into local and national subject matter experts
• An alternative to a Family foundation
• Corporate giving services
• Administrative fees that are reinvested into the Foundation, itself a nonprofit, to help support operations, grow its mission, and help support our community

If you’ve established a donor-advised fund at a national financial institution, we’d love to chat about moving it over to the Foundation. At the Foundation, your hard-earned assets receive the attention they deserve as you and your family strive to make a difference in the causes you care about the most.

For more information, call Monika Callins at 610-744-1015, or email mcollins@delcofoundation.org.