Donor Advised Fund
A Donor Advised Fund is a charitable giving vehicle that allows donors to make contributions that are eligible for an immediate tax deduction, and then make recommendations for distributing the funds to qualified nonprofit organizations on their own timetable.
“While there are other ways to support worthy causes in the Valley and elsewhere, we decided to create a Donor Advised Fund because it allows certain tax and timing advantages that are not available in making direct gifts. Working with the Community Foundation, our Donor Advised Fund has been easy to administer, especially compared to the burdensome administrative headaches described by our friends who have family foundations.”
– Jim and Barbara Bronner
“Donor Advised Funds are a planning tool that offer some great advantages for a growing number of my clients, especially those who want to donate now, but are not yet decided on the charity or charities they want to give to. They are also useful for clients that have stock or other non-cash assets to donate. Many of my clients are talking with their tax advisors about how the new tax laws might change their strategy for charitable giving and how a Donor Advised Fund can benefit their planning.”
– Deb Conroy, Estate Planning Attorney with Keller Law and Community Foundation Board of Trustees
11 reasons to establish a Donor Advised fund:
- By creating a Donor Advised Fund, a donor receives benefits similar to those of a private foundation but without the costs, administrative responsibilities and government reporting requirements.
- Gifts to Donor Advised Funds are tax-deductible to the extent allowed by the law. Donors can simplify their charitable deduction reporting for the IRS by only having one receipt.
- Donors can contribute gifts of securities, real estate or other complex assets. If those assets have appreciated in value, donors may not be subject to capital gains tax on the appreciated value.
- Donors can choose the tax years in which they make donations to their fund, allowing them to control the year of tax deductibility.
- In difficult economic times, a donor can use accumulated assets within a Donor Advised Fund to accomplish desired charitable giving without relying on other assets.
- During the year, YVCF educates Donor Advised Fund holders regarding the needs of the local community by providing a synopsis of grant requests submitted by local charities. The YVCF staff can also meet with Donor Advised Fund holders to help connect their charitable desires with local community needs.
- Distributions made from Donor Advised Funds may support qualified charities anywhere in the United States, not just local charities. There are no minimum distributions required and donors may also have the ability to remain anonymous. Donors can continue to support the charities they have in the past.
- YVCF provides a choice of investment pools that a donor can select. Assets within Donor Advised Funds are professionally managed and any growth in the fund is tax-free and increases the dollars available for distributions.
- Donor-advised funds are charged a low fee of 1% that supports a worthy cause, YVCF.
- Individuals with private or family foundations can benefit from establishing a Donor Advised Fund that can enrich and complement their philanthropic efforts.
- Donor Advised Funds have limitations and cannot support sponsorships, pledges or other cases where the donor would receive a benefit. Assets in Donor Advised Funds legally belong to YVCF, and while donors make recommendations, the YVCF Board has the final vote on all distributions (variance power).