Don't Give Out Money to Charity: Out of Your Own Pocket

What if there was a way to give more to your favorite causes without dipping into your own wallet? Imagine a strategy that not only helps you maximize your generosity this giving season but also saves you money in the process.

Donor Advised Funds (DAF)

DAFs serve as tax-efficient giving vehicles, offering many of the same benefits as private foundations while being easy to set up and maintain. Some benefits include:

• No capital gains tax on long-term appreciated assets that are gifted
• Immediate tax deduction for the full market value of the gift* for most assets
• No excise taxes, unlike a private foundation
• Assets donated are no longer part of the estate value
• No minimum annual distribution requirement for DAF account holders
  

If a stock has appreciated in value, you may not want to sell it and pay the capital gains tax. Gifting the stock directly to charity can sometimes just transfer the tax burden to the charity. When shares are gifted to a DAF, you are given an immediate tax benefit. The Donor Advised Fund will sell those shares for you and absorb the tax consequences. The full value of those funds are then available to gift to your charitable organization just like a normal cash gift. If you have long term plans around gifting, you can choose to invest the funds in the Donor Advised Fund, and they will grow tax free.