While we are always grateful to our clients, we have a new reason to highlight how wonderful they are. Through our program of setting up Donor Advised Fund charitable giving accounts, our clients have made grants to charities totaling more than $5 million!
We are so proud of the positive impact these grants have on our communities. At the same time, we are pleased that clients are embracing Donor Advised Funds, a very tax-efficient means of giving. With gratitude in mind, let's review why Donor Advised Funds are so effective:
What is a Donor Advised Fund (DAF)?
A DAF is a charitable giving account, set up at a brokerage firm like Charles Schwab, or at a non-profit such as JUF or the Chicago Foundation for Women (two terrific organizations I am involved with). The account can be titled in your name, such as the Reiches Family Charitable Fund. That has a nice ring to it!
How do I contribute do a DAF?
You can contribute cash or securities like stocks, bonds or mutual fund shares. Many DAFs accept non-publicly traded assets such as private company stock as well. Once you contribute, you have made an irrevocable gift to charity. No take-backs!
Contributing appreciated stocks or mutual fund shares with large long-term gains provides an extra benefit. You get rid of the capital gains you would have incurred if you had sold the securities and donated the cash proceeds, which may increase the amount available for charity by up to 20%.
I just write a lot of checks to my favorite charities. $100 here, $100 there… Is giving to a DAF easier?
DAFs make the charitable giving process easy and streamlined. Once you have funded a DAF, you can go online to the DAF website, and make a grant recommendation to virtually any IRS-qualified public charity. No more checks, envelopes, stamps, or keeping track of all of those receipts for tax purposes.
Do I get a charitable deduction when I give to my DAF?
Yes! You are eligible for a deduction when you contribute to your DAF. So remember, if you contribute $10,000 in 2022, but recommend a $5,000 grant in 2022 and a $5,000 grant in 2023, you get the entire $10,000 deduction upon contributing this year. You can “bunch” contributions that you would have made over several years into a single year, which may have tax advantages. As always, check with your tax advisor.
What happens to the money while it’s in the DAF?
Funds in your DAF can be invested in a variety of options. The funds grow tax-free, just like in a private foundation.
How do I learn more?
I love to talk about DAFs! Please connect with me below, or call your RRCM advisor.
Shari Greco Reiches
Shari co-founded Rappaport Reiches Capital Management with one goal - to maximize the return on life for her clients. Please connect with Shari below. She loves to talk about investing, financial planning, and Barry Manilow.
The author does not intend to provide investment, legal or tax advice as these materials are for general educational purposes only. Please consult your legal, tax or investment professional for advice on your particular situation. This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. It is not intended to be a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction. Investing involves risk including the possible loss of principal. Past performance does not guarantee future results. Please refer to RRCM’s Form ADV Part 2 for additional disclosures regarding RRCM and its practices.