What Are the Benefits of a Donor-Advised Fund for Investors?
If you’re a charitably inclined investor, a donor-advised fund (DAF) offers several advantages while helping you achieve your giving goals. Akin to a personal charitable foundation, this type of investment account allows investors to make donations to multiple charities over time and manage their tax liability. Here are some key benefits:
- Tax Efficiency: Investors can contribute highly appreciated shares into a DAF, effectively removing gains from their portfolio and managing associated capital gains tax. Investors can also time their contributions during high-income years to maximize tax deductions.
- Flexibility: A DAF gives investors control over where and when to make tax-deductible contributions, enabling grants to various charities over several years from one charitable account. In the meantime, the fund benefits from tax-free growth on investment returns.
- Anonymity: If privacy is important to investors, donations can be made under the DAF’s name, allowing them to remain anonymous.
At Opes Wealth, we understand the intricacies and rules of establishing and managing donor-advised funds while integrating with your broader giving strategy. This includes modeling and discussing the many benefits of gifting, choosing which investments to transfer, and even directing donations based on your guidance. To learn more about how we may best serve you in your philanthropic objectives, complete your financial assessment.
Audio Transcript:
Louis Odette (00:00):
Have you ever dreamed of having your own charitable foundation but thought that they were only for the ultra-rich? Well, with the donor-advised fund, now you can. Donor-advised funds offer several benefits for charitably inclined investors. First, they can create tax-efficiency because contributions can be made of highly appreciated shares, thereby removing embedded gains from your investment portfolio. And they can also be timed to coincide with high income years to maximize the benefit of the tax deduction. Furthermore, they offer flexibility. Grants can be made to several charities over multiple years, and the assets can be invested for growth in the interim. And finally, for investors who desire anonymity in their giving, grants are made in the name of the fund rather than the investor, providing privacy if desired. Your Opus Wealth Advisor can work with you to establish a donor-advised fund and design a charitable giving plan. If this sounds interesting to you, let’s discuss.
Written by: Louis Odette
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