A donor-advised fund can help you maximize the power of your philanthropy. Many of us procrastinate until the last minute to consider donating to charities at year-end. If this describes you, don’t feel bad, you’re in good company. But you can do something about it.
A donor advised fund can help you with both short and long-term objectives that simplify your charitable giving and make it more effective and meaningful. They also provide a platform for preparing your heirs to learn, in a responsible and caring way, the unique responsibilities associated with transitioning wealth.
That said, it’s worth mentioning that the associated tax benefits may offer sufficient motivation for starting a donor-advised fund, but subsequent generations will likely require a deeper purpose to sustain interest. In other words, it’s legacy and values that provide the glue to hold a family and its philanthropy together, not merely tax savings.
Philanthropy: more than just charitable giving
A donor-advised fund acts as a simple and flexible charitable-giving vehicle that empowers you to create, grow and distribute your philanthropic wealth. At iGiftFund we’re more than simply sponsors of your fund, we take it to a higher level and work as stewards of your charitable wealth. We take time to truly get to know you as well as your chosen trusted advisors to ensure that your grantmaking activities build your legacy. This stewardship arrangement — especially since we are truly independent — offers a number of unique benefits:
Tax benefits. Because of our status as a public charity, your contributions qualify for immediate and highest tax benefits available.
Contribution flexibility. At iGiftFund, we accept securities, cash, appreciated marketable securities, illiquid securities (C-Corp, S-Corp, real estate) and life insurance. Most public charities that sponsor donor-advised funds don’t accept such a broad array of illiquid assets.
You maintain advisory privileges. You retain the privilege to advise how we — as your steward — administer your fund, including investment management, grantmaking and selecting who will succeed you after you are gone. This concept of “advising” in contrast to “directing” is key to the superior tax benefits a donor-advised fund offers over those of a private foundation.
Flexible Grantmaking. In establishing your donor advised fund, you separate your year-end income tax decisions from your charitable grantmaking decisions. You receive your tax benefits immediately, but may choose to make grants on your own convenient timetable.
Simplicity and access. As compared to giving directly to charitable organizations (checkbook charity), donor-advised funds simplify your charitable giving: no need to liquidate securities or chase down tax receipts to support your income tax deduction. You can access your donor-advised fund online, much like your familiar electronic banking arrangement.
Prepare younger generation to responsibly handle inherited wealth. A donor-advised fund uses charitable dollars to prepare the younger generation to responsibly handle and maintain inherited wealth. It provides a meaningful, controlled way to involve even the youngest family members in making a positive impact on the causes they support. This experience is an excellent opportunity for younger heirs to find their callings as contributing members of their communities, beyond career boundaries.
Privacy or recognition in grantmaking. You can opt for full recognition, partial recognition, or full anonymity on your fund. If you opt for full anonymity, all grants made through your donor advised fund remain completely private. Privacy in grantmaking with a donor-advised fund means you don’t have to worry about offending friends and family who may not agree with the causes you support.
Donor advised funds offer numerous opportunities to engage the family, even across generations. Discussions about where grantmaking will have the biggest and most positive impact provide opportunities to learn about the great responsibility associated with family wealth that otherwise wouldn’t occur. Including the youngest family members in the grantmaking process can have a positive lasting effect that will echo for generations to come.