Simplicity | Flexibility | Generosity
Giving shouldn’t be complicated. If you are looking for a simple, flexible, and tax-wise way to manage your charitable giving, consider a donor advised fund.
Each of you should use whatever gift you have received to serve others, as faithful stewards of God’s grace in its various forms.
How It Works
STEP 1
Contribute – make an irrevocable contribution to your fund and receive immediate tax benefits
STEP 2
Invest – grow funds until ready to distribute
STEP 3
Distribute – recommend distributions to qualified ministries and charitable organizations when ready
Advantages of Using a Donor Advised Fund
Simplicity – Manage all of your charitable giving in one place; give one gift and divide it among several organizations over time.
Flexibility – Make an irrevocable contribution when the time is right for you and recommend distributions over time as you are ready.
Legacy – Involve your family in your giving, even beyond your lifetime.
Growth – Allow your irrevocable contributions to grow tax-free until distribution.
Tax Benefits – Immediately receive the tax benefits for your gift of cash, appreciate securities, appreciated real estate, and more. Consider “bunching” your contributions to take advantage of itemized deductions in a given year.
Frequently Asked Questions
What is the minimum contribution to open a donor advised fund?
The minimum amount for the initial contribution is $5000.
What is the minimum grant recommendation from my donor advised fund?
Distributions to qualified ministries and charitable organizations must be at least $250.
Can I set up recurring gifts from my donor advised fund?
Yes! You may make one-time recommendations or set up periodic recurring distributions.
Can I choose the name of my donor advised fund?
Yes! As part of the fund application process, you may suggest a name for your fund. Include your family name, honor or memorialize a loved one, or be creative! Some common examples of fund names include 1) The John and Mary Smith Family Fund; 2) The Smith Family Foundation; 3) The Smith Giving Fund; 4) The Smith Family Memorial Fund.
What are the advantages of giving appreciated securities or real property?
Giving appreciated stocks, bonds, mutual funds, or real estate creates a two-fold tax benefit. First, you receive a charitable deduction for the fair market value of the gift; second, you avoid the capital gains you would have incurred upon the sale of the asset. With a donor advised fund, you can then distribute one larger gift over time to multiple recipients.
Can distributions be made anonymously?
Absolutely! When you recommend a distribution, there will be a place for you to request that it be made anonymously.
Can I make a QCD from my IRA to my donor advised fund?
Unfortunately, the IRS does not allow qualified charitable distributions (QCDs) from an IRA to a donor advised fund at this time.
What happens to my donor advised fund when I pass away?
There are three main options for your fund after you pass away: 1) Name a successor to continue making recommendations; 2) Continue existing recurring distributions until funds are exhausted; 3) Make a lump-sum distribution of all remaining funds to specified charitable organizations.
Is a donor advised fund an alternative to establishing a formal family foundation?
Donor advised funds have much to offer without the high fees and time-consuming administration (meetings, paperwork, audits, regulatory compliance, etc.) of a family foundation. We would be happy to answer your questions and see if a donor advised fund would accomplish your goals.
Examples of How Donors Are Using Their Donor Advised Funds
Giving Together
The parents of one of our donor families set up an account. Every year at Thanksgiving, they set aside time to meet together and determine their charitable giving for the next year. The kids will take over when mom and dad pass away and continue teaching generosity to the next generation.
Bunching Strategy
In order to take advantage of itemizing charitable contributions, many donors make larger contributions to their fund in a given year to cover their giving for several years. They then make distributions as desired over time. Giving appreciated securities or real estate is a great way to take advantage of this strategy.
Donor advised funds are a great vehicle for splitting one gift among many recipients. You make one gift (easy!) and then recommend distributions as you are ready over time to various ministries or charitable organizations. Again, giving appreciated securities or real estate is a great way to employ this method.
Organize Your Giving
There are many ways to make charitable gifts … cash, check, credit/debit card, recurring electronic gifts, websites, just to name a few. With a donor advised fund, you can consolidate your giving in one place. Your fund statements and donor portal will naturally keep a record of all contributions and distributions.
Other Types of Accounts
Endowment Funds
Endowed gifts keep working year after year to provide funds to churches, ministry organizations, and other charities until Jesus returns. In short, an endowed gift is invested to keep the principal intact while paying out a designated portion of the income each year to the designated charitable organization(s). Endowments can be funded with cash or appreciated assets (minimum $50,000.00). Unlike donor advised funds, endowments can accept qualified charitable distributions from an IRA.
If you are interested in establishing an endowment fund, please contact us for more information.
Specific Purpose Funds
There are two main types of specific purpose funds. First, a fund may be established to provide support to one specific church, ministry organization, or charity. Second, a fund may be established to support a specific field of ministry (i.e. Christian higher education, foreign mission hospitals, cancer research, church planting, etc.). In either case, the specific purpose of the fund cannot be changed once the fund is established. Specific purpose funds can accept qualified charitable distributions from an IRA.
If you are interested in establishing a specific purpose fund, please contact us for more information.