Donor Advised Funds

Are you interested in charitable giving and making a difference in your new retirement community and state? You may want to consider setting up a donor advised fund as a tax free and convenient way to consolidate your charitable giving, a donor advised fund (DAF) is a charitable investment account that can be a flexible and tax-advantaged way to support your favorite charities. DAF’s can offer several benefits, including:

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• Tax Deduction
  • — You can usually take an immediate tax deduction when you contribute cash, securities or other assets to a DAF.
  • Tax-free Growth
    • — Once invested, the funds in a DAF can grow tax free. You can choose how your fund is invested, and some DAF’s may allow you to donate complex assets like real estate, cryptocurrency or art. You can also set aside funds for upcoming donations while investing in liquid securities or investing in other assets for longer term growth.
    • Strategic Giving
      • — You can use a DAF to support charities over time and on your own timetable. You can also maintain family involvement in charitable decisions and create a legacy.
      • Simplified Giving
        • — You can manage all your charitable giving from one account.

        When my wife of 28 years passed away in 2004, I decided to set up a donor advised fund (DAF) with her IRA. This is a way to directly transfer funds tax free from an IRA to the fund. You do give up direct control of the assets but, then are able to make recommendations to the fund manager to make grants of your choosing. The DAF manager makes it all stress free. The fund manager determines if the charity qualifies under IRS rules for the grant (usually being a 501©(3) charity). They take care of investing your money, delivery of the check and letter to the charity and any additional paperwork.

        In addition, the DAF website makes it easy and convenient to make grant requests, check your balance, review previous grants, set up repeating grants and a host of other account management features.

        This was a legacy as a memorial to my late wife, but eventually, when I remarried, I added my wife, Kathie, as an authorized grantor, and changed the fund name to include reference to both of our late spouses. It is now a combined family fund. Since my late wife was an educator, one portion of our charitable giving portfolio includes annual donations to the Mesa Public Schools Foundation (in Mesa, Arizona) and the SaddleBrooke Community Outreach Endowment Fund for higher education scholarships for students in the Copper Corridor schools.

        Our fund was started 20 years ago, and we have distributed about 5 percent each year. We are pleased to know that the fund has about 30 percent more than when we started!

        Establishing a DAF is easy. Talk to your financial or estate planner to learn more about it.