As financial advisor, you are in a unique position to give your clients a deeper understanding of the variety of options for charitable giving tax strategies. Living a lifestyle of generosity involves giving wisely and abundantly. It also includes helping your clients choose the most efficient giving strategies for their families and specific goals.

From a Tax Perspective, Contributing to a DAF or DRF has Numerous Benefits

  • Immediate and Maximum Income Tax Deduction
  • Avoid Capital Gains Tax on gifts of long-term appreciated stock
  • Avoid Estate Tax – assets in a DAF are not included in the donor’s estate
  • Assets grow tax free
  • May Reduce Alternative Minimum Tax (AMT)

Has your client considered other strategic fund gift planning options such as:

  1. Donate private business interests (S-Corp, C-Corp, LLCs, and LPs) to a DAF DRF. With gifts of S-Corp stock, the charity takes on the donor’s cost basis and will be subject to Unrelated Business Income Tax (UBIT) on –
    1. its gain from the sale of the shares and
    2. its share of any income generated by the S-Corp during the time the DAF owns the shares.

Tip:  iGiftFund offers a unique strategy that reduces the effective UBIT rate from 20% to 8% leaving more AUM for the financial advisor in the DAF.

(Contact us at [email protected] to learn more).

  1. Contribute restricted shares to a DAF or DRF. Clients can claim immediate and maximum tax benefits. Once the company’s general counsel removes potential restrictions for sale or transfer, the gifted shares may be sold by the DAF or DRF.
  2. Combine portfolio rebalancing on taxable assets with gifts to a DAF or DRF. Clients can give over-represented, long-term appreciated assets to a DAF or DRF instead of selling the assets.

Tip: This strategy allows the donor to claim immediate and maximum tax benefits and avoid capital gains tax on the gifted assets.

  1. Offset the tax liability on Roth conversions by gifting other assets to the DAF or DRF. Clients can offset the tax liability of a Roth conversion with a charitable deduction. This can be accomplished by gifting assets other than the Roth to a DAF or DRF in an amount that will offset the tax liability.
  2. Accelerate the termination of a Charitable Remainder Trust (CRT) into at DAF or DRF. In this strategy, the donor assigns the income interest and the remainder interest to a DAF or DRF. Since the DAF or DRF is now both income and remainder beneficiary, assets in the original CRT collapse into the DAF or DRF.

Tip: This CRT acceleration strategy enables donors to support their charitable interests while living, and it may generate a substantial, additional income tax deduction when the original income tax deduction is recomputed to reflect the earlier remainder distribution.

  1. Make a tax-free Qualified Charitable Distribution (QCD) from a traditional IRA to a DRF that you, as financial advisor, can continue to manage. Normally, distributions from a traditional IRA are taxable when received. In 2024, clients who are age 70½ and older (and spouses, if eligible) can direct QCDs of up to $105,000/year (index adjusted annually) tax -free from their traditional IRAs to a DRF. When the client reaches age 73 and must begin taking Required Minimum Distributions (RMDs), amounts taken as a QCD count toward that year’s RMD.

Tip: This QCD strategy will work even if you take the standard deduction.

Tip: DAFs, Private Foundations, and Supporting Organizations are not eligible to receive QCDs. Unlike many national DAF sponsors, iGiftFund offers a range of funds – Donor Restricted Funds (DRF) – that are not DAFs. As such, DRFs are eligible to receive tax-free QCDs that the financial advisor can manage and that count toward the client’s RMD.

What makes iGiftFund Different?

  • Savings on DAF Fees: At least 25% lower than other DAF sponsors.
  • The Donor’s Financial Advisor Manages the Assets in the DAF: The donor’s financial advisor can manage the DAF assets on any platform, regardless of fund size, in open architecture.
  • Industry Experience: The longest experience in the DAF industry.
  • Advanced IT Platform: A robust IT infrastructure for a modern, efficient user experience.
  • Person to Person Support – No Call Centers: All calls are answered by real people, offering personalized service and direct support.
  • Fund Options in addition to DAFs: We also offer Donor Restricted Funds (DRFs) – DRFs can be tailored to a donor’s unique needs including designated funds, field of interest funds, unrestricted funds, scholarship funds, endowment funds, etc.

This content and its distribution are not intended to communicate tax, legal, or accounting advice.

Please consult your tax, legal, and accounting professionals relative to this content.

About iGiftFund

iGiftFund is an IRS-recognized, independent, public charity that sponsors donor advised funds.  Its mission is to inspire donors to create, preserve and distribute their philanthropic legacy and to make a truly remarkable impact on the lives of others, including the donor.

With the hallmarks of simplicity, accessibility and low administrative fees, iGiftFund sets the standard of excellence in the industry and distinguishes itself from the large, national commercial and independent DAF sponsors. Based in Hudson, Ohio, iGiftFund works nationally with donors and with financial advisors on their familiar investment platform, in open architecture. iGiftFund’s administrative fees are the most competitive in the industry, starting at just 45 basis points on the first $500,000 tier.