Key Benefits of Donor Advised Funds (DAF)

Few charitable giving options provide the versatility and tax efficiency that Donor- Advised Funds (DAF) do. Donor Advised Funds are the fastest-growing charitable giving vehicle in the United States because they are one of the easiest and most tax-advantageous ways to give to charity.

It is a fact that one of the main benefits of a Donor-Advised Fund (DAF) is that it allows your philanthropic intent to have your charitable assets professionally managed and distributed to your desired causes at a fraction of the cost of a private foundation.

It is also a fact that contributions made to a Donor-Advised Fund are irrevocable and fully deductible as of the date it leaves your control. The extent of your deduction will depend on the type of asset being contributed and your particular tax situation.

Separate tax planning and charitable decisions: Immediate tax advantages through contributions can be achieved now and grants can be recommended to charities later. Donor-Advised Funds can help eliminate the year end pressure to select a charity and make a grant.

Cash Contributions: Cash contributions to a Donor-Advised Fund are eligible for a federal income tax deduction up to a maximum 60% of adjusted gross income (AGI) in the tax year the in which the contribution is made. If your contribution exceeds this limit, you may carry forward the deduction up to five (5) years.

Publicly Traded Securities: For publicly traded securities held for more than one year, the amount of the deduction is the mean value of the high and low prices of the security on the date of the contribution. You may generally deduct up to 30% of your adjusted gross income for contributions of appreciated securities held more than one year.

For securities held for one year or less, the allowable deduction will be based on either your cost basis or fair market value, whichever is lower.

If your contribution of securities is greater than 30% of your adjusted gross income, you may carry the deduction up to five (5) years.

Estate Taxes: Donor-Advised Funds (DAF) also provide great estate planning opportunities. All contributions to a DAF are excluded from your estate for estate tax purposes and therefore exempt from estate tax at your death.

Account Income: Any income that may accrue to the Donor-Advised Fund account from investment growth is exempt from taxes but is not deductible.

Capital Gains: One of the most rewarding benefits of Donor-Advised Funds is the ability to contribute appreciated securities without incurring any capital gains tax liability.

Enjoy immediate tax deduction without any startup costs.

• Benefit from an immediate maximum income tax deduction for DAF contributions, subject to IRS limitations.

Donate appreciated assets tax free

• Benefit from donating anything with appreciated value (securities or real estate) to a DAF and immediately deduct their fair market value from your taxes, without incurring any capital gains liability.
• Benefit from no tax on accumulating value from income or capital gains on investments in the DAF.

Flexibility and Convenience

• You can request a grant to any IRS-qualified charity, at any time.
• Your grant(s) may be made anonymously, if you desire, or given in your fund’s name.
• You may name an account advisor who will have the ability to recommend grants from your account. You also can designate successors to request current or future grants, even beyond your lifetime continuing a Charitable Legacy.
• You recommend uses for the DAF – working with our professional staff to support the causes and organizations you care about most.
• You can make tax deductable contributions to your fund at any time.

Record keeping made easy

• With a Donor-Advised Fund the Texas Forest Country Community Foundation will provide consolidated reporting and record keeping. You’ll receive periodic account statements, gift receipts and IRS-ready tax information.

Enjoy a private client/donor portal

• Our Secure online portal gives you 24-hour access so you can recommend grants, learn about community projects, research nonprofits or check your fund balance or transactions.

Few Charitable giving options provide the versatility and tax efficiency the Donor- Advised Funds do. The DAF simplifies and consolidates record keeping and tax reporting.

In terms of comprehensive financial planning there are few strategies that provide the many and varied opportunities that you get from a Donor-Advised Fund. Not many charitable vehicles provide the same funding flexibility regarding the types of assets that can be donated. Few offer the donor the ability to be involved in how their contributions are used. And, still fewer provide the context to help teach heirs the value of philanthropy.