Beginning in the mid-1980’s, when Donor Advised Funds began to emerge from relative obscurity to become the most popular form of charitable giving today, I have been fortunate to work with financial advisors and their clients on their Donor Advised Funds (DAF). Initially, many donors view their DAF as a simple, time-sensitive tactical tool to save on taxes. However, once engaged, their thinking becomes more strategic as they see the role this incredibly simple tool can play in creating, preserving and distributing the family’s wealth in meaningful ways. But doesn’t distributing wealth mean giving it away?
Before answering this question, let’s first take a look at the components of “wealth”.
“Wealth” can be seen as consisting of three parts:
Part 1 Financial Wealth – The wealth your client’s can keep, spend during their lifetime or give to their heirs as an inheritance.
Part 2 Social Wealth – The wealth they can’t keep, can’t spend and can’t pass on to their heirs. Typically this wealth is either:
- paid to the government in taxes or
- given directly to charity
In either Part 1 or Part 2, clients typically give up control of that wealth.
Is there an alternative…a way where clients can distribute their social wealth without giving up control over its use? Yes, we call this “Legacy Wealth.”
Part 3 Legacy Wealth – Your clients can establish a DAF at iGiftFund and turn their “Social Wealth” into a simple, tax-smart, and meaningful charitable investment account with the following advantages. Your clients will have the ability to –
- receive the highest level of tax benefits available (superior to those of a private foundation)
- contribute a wide variety of assets
- recommend you as the investment manager
- take an immediate tax deduction but recommend grants at a later, more convenient time
- recommend grants to qualified charities all around the country
- remain anonymous
- pass on family values to children and grandchildren and help them become responsible, caring adults
- name a successor advisor so that the fund can go on to successive generations
- integrate their other charitable and financial planning strategies including as remainderman of charitable remainder trusts, as an income beneficiary of charitable lead trusts, and as the beneficiary of bequests at the time of death, as the beneficiary of life insurance policies, and as the beneficiary of IRAs and deferred compensation plans
Now, thanks to Donor Advised Funds, your clients can distribute a portion of their wealth accumulated over a lifetime but retain control over how and when that wealth is used to support charitable causes important to them. Even more, they can pass this ability on to successive generations.
You clients will have the special satisfaction of knowing that a portion of their wealth will forever a make their world a better place. Or, simply put, that their life’s efforts have made a difference.
Your Role as Trusted Financial Advisor
You are uniquely positioned to help you client manage their Legacy Wealth. Thanks to this simple tool you:
- Keep your client and manage their charitable investments on you familiar platform in open architecture
- Add value to your client relationship as trusted advisor
- Build a bridge to the next generation and earn their loyalty over successive generations
- Distinguish your practice among your peers
- Add to the market value to your practice
About the Author
Phil Tobin created iGiftFund as a national, independent donor advised fund (DAF) with the goal of creating a unique, personalized donor experience. He serves as its Chairmen/President.
Among the most experienced DAF experts in the country, Phil pioneered one of the earliest DAFs when he served in the 1980s as CFO of The Cleveland Foundation. Subsequent to that, he co-founded a donor advised fund which, prior to his leaving in 2016, had become the 16th largest charity in the country. Phil serves as iGiftFund’s Chairman/President.
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.