Reasons to Consider a Donor Advised Fund at Year-End
December 12, 2018
December is a season of giving when a lot of people want to show gratitude. For many of us, that means considering how we can best help others by sharing what we have. At Central Carolina Community Foundation, we believe everyone can be a philanthropist. We know that giving back makes a difference in our communities. If giving is a priority for you, a legacy you want to pass to future generations, you may have considered establishing a donor advised fund (DAF) – but did you know you could start one with just $10,000?
Establishing a donor advised fund makes it easier to keep track of your charitable giving
Keeping every donation receipt can be daunting. And remembering to compile them in time for tax season is one more task you’d probably like to avoid. When you establish a fund, you’re allowed to claim a deduction immediately, for the full amount of your contribution. You don’t have to decide right away which charities your fund will support, and you don’t have to make those donations in the same calendar year. Even better? You can abandon those over-stuffed envelopes full of receipts, because we’ll send you a quarterly report of your gifts.
Donor advised funds let philanthropists bunch donations in one year and take a standard deduction the next
New tax rules have raised the standard deduction to $12,000 for a single person, $18,000 for heads of households, and $24,000 for married couples filing jointly. Donating a lump sum to your fund allows you to exceed the amount required to itemize deductions in a calendar year, even if you plan to distribute those funds in subsequent years. Let’s say you and your spouse contribute $30,000 to a fund in year one. You will have $6,000 over the standard deduction to itemize in that calendar year. You can make grants whenever you like to your favorite charities, replenishing the fund as needed.
You’ll benefit from itemizing deductions in one year and taking the standardized deduction in subsequent years. This is how donor advised funds can offer tax benefits to anyone who gives, not just those whose donations build hospital wings. (Though we can certainly help with that, too!)
Your donor advised fund leaves a legacy of giving
When teaching children about managing finances, you probably include advice on giving. Many children are encouraged to set aside a portion of their allowance or summer paychecks to save, and a portion to give. You can involve your children in the disbursement of your fund, letting them help choose charities. As they grow older, they may even contribute to it.
Passing on a legacy of giving ensures your gifts continue to benefit others after you’re gone. While you can specify charities to receive funds after your death, you can also leave the fund as a legacy to your heirs, a vehicle for them to continue the cycle of giving.
Inspired? Setting up your fund is as easy as picking up the phone. Contact Heather Sherwin at 803-978-7831 to learn more about how a donor advised fund can make it easier to achieve your philanthropic goals. We wish you joy and peace during this season of giving!