As the final months of the year draw near, many individuals are turning their attention to tax planning and charitable giving. Charitable donations are a good way to support meaningful causes and create a positive impact within communities. One effective method for managing charitable contributions is through a donor-advised fund, offering a range of benefits for both donors and the supported charitable organizations.
A donor-advised fund (DAF) serves as a type of charitable giving vehicle, allowing individuals to make contributions to a tax-exempt organization and subsequently recommend grants to qualified entities from the fund over time. Typically administered by a sponsoring organization, such as a community foundation or a financial institution, these funds are established with a minimum initial contribution.
Advantages
- Flexible giving option: Donors can make a contribution to the fund at any time and then recommend grants to qualified organizations over time.
- Tax benefits: Contributions to the fund are tax-deductible in the year they are made, and the fund can grow tax-free over time.
- Gifting Appreciated Assets: In most instances, you are able to gift appreciated assets such as stocks, bonds or real estate holdings to a DAF and deduct the full market value of the assets on your tax return which avoids the capital gains tax on the appreciation of those assets.
- Anonymity: Donors can remain anonymous if they prefer.
- Leave a legacy: Donors can establish a fund in their own name or in the name of a loved one, and then make recommendations for grants over time, even after they pass away.
When evaluating your options, a donor-advised fund can be a valuable tool for charitable giving. It provides a flexible giving option, significant tax benefits, the potential for anonymity, and the ability to create a lasting philanthropic legacy.
Presented by the Financial Planning Committee of Lake Street, an SEC Registered Investment Adviser
The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. Diversification does not ensure a profit or guarantee against a loss. There is no assurance that any investment strategy will be successful. Investing involves risk and you may incur a profit or a loss.
