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Amplify Your Charitable Impact with Donor-Advised Funds

February 21, 2024

 

As a charitable giver, it is important to find ways to refine your giving strategy and maximize the impact of your donations. A donor-advised fund (DAF), a philanthropic account that allows donors to contribute to charity, is a great way to achieve this. Contributions to these flexible accounts can be invested in ways that will grow your philanthropic funds over time. 


When you have funds available to donate, you can contribute them to your DAF before knowing which charity you want to support. In the meantime, your donation might grow. A DAF allows you to support any IRS-qualified public charity, whether it's your alma mater, a local homeless shelter or an international human rights organization. 


C1F can help you decide on smart contribution strategies that work for your situation. One way to do this is by donating a high-performing stock to your DAF. Unlike other forms of charitable giving, DAFs allow you to contribute multiple types of capital beyond cash. This is a great way to keep an appreciated asset in your investment portfolio, especially if your advisor believes that the stock still has the potential to grow. 


You can also set up automatic funding for your DAF. This is a great way to make a large contribution to your fund, spread out over time. Automatic contributions to your DAF can be viewed as those to retirement savings accounts. Funds will then have more time to grow tax-free until you’re ready to grant them to a charity. 


It is also a great option to make higher contributions during a year with higher income. You can prepare for a lower-income year by making a higher donation. This will help you leverage tax advantages and, again, will grow your contribution until you’re ready to recommend a grant. 


If you have ever considered creating a private foundation to make charitable contributions, Client 1st Financial recommends considering a DAF. A donor-advised fund offers more benefits than a private foundation, including a tax-exempt status and no start-up costs or annual income excise tax. Less complexity makes for an easier charitable giving experience. 


Donor-advised funds are just one way to amplify your impact. Creating a charitable legacy looks different for everyone, and Client 1st Financial is ready to answer your questions and build a plan that fits you. Contact us here.