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Using a Donor-Advised Fund to Simplify Charitable Giving

Updated: Jul 20, 2023

Many times, we make our charitable decisions in a year-end rush to capture tax-deductions, rather than taking a planned, long-term approach to charitable giving that can allow our contributions to grow into a more substantial amount over time, increasing the overall impact of our gifts. The decision to give is easy, but knowing the best way to give may not be.

If you are looking for a way to make your giving more effective while maximizing the tax benefits of your philanthropic activities, a Donor Advised Fund may be right for you.

When you set up a donor-advised fund with the RG Bar Investment Group, you control where the charitable contributions go while we handle everything else.

What is a Donor-Advised Fund?

A donor-advised fund (DAF) is a charitable giving vehicle created for the purpose of managing charitable donations on behalf of an organization, family, or individual. A donor-advised fund offers the opportunity to create an easy-to-establish, low cost, flexible vehicle for charitable giving as an alternative to direct giving or creating a private foundation. Donors enjoy administrative convenience, cost savings and tax advantages by conducting their grant making through the fund. Our Donor-Advised Funds have been designed to simplify your annual giving by allowing you to contribute appreciated assets when you feel the timing is right, and then make grants over time to the charities of your choice.

The Benefits of a Donor-Advised Fund

  • An RG Bar Investment Group DAF is easy to implement: Our team can set up your DAF account immediately with little to no cost, and with an initial investment requirement as low as $25,000.

  • The donor maintains control: You determine the recipient(s) of your donation and recommend the grants and investment allocations.

  • You can take your time with decision making: With a DAF, you can realize the immediate tax advantages of the gift but still donate over time without having to decide exactly where that donation will go. This lets you take an income tax charitable deduction now, and direct your giving when you’re ready.

  • Enjoy tax efficiencies: When donating non-marketable assets—such as privately held stock or tangible property—to a DAF, your income-tax deduction is based on the fair market value of those assets. Non-marketable assets donated to a private foundation, on the other hand, are typically limited to the donor’s cost basis —the original value of the assets.

  • Diversification of a concentrated portfolio: Our team can help you contribute appreciated publicly traded stock to a donor-advised fund in order to reduce your concentrated stock position.

Donor-Advised Funds are most often compared to Private Foundations, yet there are some very distinct differences between the giving vehicles. For example, because a DAF is housed in a public charity, donors may receive the maximum tax deduction available while avoiding excise taxes and other restrictions imposed on private foundations. Moreover, donors do not incur the cost of establishing and administering a private foundation, which typically includes staffing and legal fees.

Both DAF’s and private foundations can work independently but can also frequently realize tremendous giving potential when used in concert. Both DAF’s and private foundations can be the beneficiary of a Charitable Lead or Charitable Remainder Trust. Additionally, a DAF allows your private foundation to satisfy its annual 5% distribution requirement, donate to nonprofits whose work falls outside of its mission statement, donate to non-U.S. charities and more. Our team can help you determine whether a DAF is right for your foundation.

If you’re seeking to simplify your giving strategy, the RG Bar Investment Group can help you evolve your private foundation to a donor-advised fund account. You won’t lose control, and you and your family will still have the ability to be advisors through a simple process.

The Almanac of American Philanthropy has found that Americans out-donate Britains and Canadians two-to-one and Italians and Germans 20-to-one. So, get out there and do what Americans do so well-- make gifts. And take write-offs.

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