Unlock the Power of Charitable Giving with a Donor-Advised Fund
Make a Meaningful Impact:
A charitable donor-advised fund (DAF) is a philanthropic giving vehicle administered by a public charity. It allows donors to make an irrevocable charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund to qualified charitable organizations over time.
Key Features of a Donor-Advised Fund:
Investment Flexibility
Combine a DAF structure with a life insurance policy to minimize taxes while supporting charitable causes. Enjoy immediate tax deductions, tax-free growth, and a tax-free death benefit for your chosen charity. Establishing a DAF strategy allows you to contribute appreciated assets, such as stocks, real estate, or a business interest, or cash to an LLC. The LLC can then sell these assets, potentially triggering capital gains tax. However, as the LLC is a charitable entity, it is exempt from paying capital gains tax on the sale.
Immediate Tax Deduction
This strategy offers several tax benefits, including an immediate income tax deduction for the charitable contribution portion of the LLC interest. Additionally, the assets within the LLC can grow tax-free, and the life insurance policy’s death benefit is excluded from your estate for estate tax purposes. Beyond the tax benefits, this strategy allows you to make a meaningful impact on charitable causes during your lifetime and beyond. Our team works closely with you and your tax advisors to tailor this strategy to your specific financial situation and charitable goals. Combine a DAF structure with a life insurance policy to minimize taxes while supporting charitable causes.
Support Charitable Causes
Beyond the tax benefits, this strategy allows you to make a meaningful impact on charitable causes during your lifetime and beyond. Our team works closely with you and your tax advisors to tailor this strategy to your specific financial situation and charitable goals. Establishing a DAF strategy allows you to contribute appreciated assets, such as stocks, real estate, or a business interest, or cash to an LLC. The LLC can then sell these assets, potentially triggering capital gains tax. However, as the LLC is a charitable entity, it is exempt from paying capital gains tax on the sale.
Tax Benefits Of A Donor-Advised Fund
Avoid Capital Gains Tax:
When donating appreciated assets like stocks or real estate to a DAF, donors avoid paying capital gains tax on the appreciated portion. The full fair market value of the asset is tax-deductible.
Bundling Deductions:
Donors can “bundle” multiple years’ worth of charitable donations into one tax year by making a larger upfront contribution to a DAF. This can help them itemize deductions in that year and take the standard deduction in other years.
Tax-Free Growth:
Assets in a DAF grow tax-free, allowing for potential compounding over time before being granted out to charities. Assets donated to a DAF are removed from the donor’s taxable estate, which can help reduce estate taxes for larger estates.
Types Of Assets Can Be Donated To A Donor-Advised-Fund
A wide variety of assets can be donated to a donor-advised fund (DAF), including:
Cash and Publicly Traded Securities:
This includes cash, stocks, bonds, mutual funds, etc. that are traded on public exchanges.
Real Estate:
Both residential and commercial real estate properties can be contributed to a DAF.
Cryptocurrency:
Major cryptocurrencies like Bitcoin can be donated to many DAF sponsors.
Other Alternative Assets:
Additional asset types like private equity, hedge funds, collectibles, and other illiquid assets may qualify in some cases.
Private Company Stock:
Shares of privately held companies or other closely held business interests are eligible donations.
Restricted Stock:
Restricted securities that are not yet freely tradable can also be donated.