A donor-advised fund is a charitable investment account solely for supporting charitable organizations you support. When you contribute appreciated securities or cash to the account, you get an immediate tax deduction. The funds in the account grow tax tax-free. You can recommend grants to any IRS-qualified charity.
One of the biggest benefits of using a donor-advised fund is simplified recordkeeping. Let’s say you contribute $10,000 of appreciated securities into a donor-advised fund. Then, you grant the funds to 20 different charities. In the eye of the IRS, you’ve only made one gift. Normally, you’d need to receive and maintain a written acknowledgment for any contribution of $250 or more.
- The charitable deduction is generated when contributing to your donor-advised account. So, you can contribute, get the deduction, and decide where the money goes later. No rush to get contributions out at year-end.
- If you regularly donate to certain charitable organizations, it’s easy to make another grant. No mailing checks it’s done electronically.
- Using appreciated securities to gift gives you a deduction for the fair market value and avoids capital gains tax.
- Schwab, Fidelity, and many others have great technology platforms. Your current broker or investment advisor probably offers this option so you can manage it along with other accounts.
- Your fund is not required to file a year-end tax return. This makes the fund very inexpensive to maintain.
Please contact your Dent Moses advisor if you have additional questions.