Donor-Advised Funds: An Effective Tool for Charitable Gifting

Improving financial markets have created a renewed interest in charitable gifting. One particular tool that we have found to be very effective in helping clients achieve their charitable objectives is donor-advised funds.

What are donor-advised funds?

Donor-advised funds are accounts that can be funded with appreciated stocks, real estate, cash or other assets. They can be established directly through charities or community foundations, as well as many mutual fund companies or brokerage firms. Contributions made to donor-advised funds are invested and remain in the fund until you determine which individual charity to send a contribution.

What are the benefits of using donor-advised funds?

Besides the non-financial benefit of helping a worthy charity, there are many benefits of utilizing donor-advised funds to help facilitate your charitable intentions including:

• The grantor receives a tax deduction for the entire value of the contribution (with some limits) in the year the contribution is made, but the gifts to the individual charities can be spread out over several years.

• You have control of the name of your donor-advised fund. In other words, you can name your fund The John Smith Memorial Fund (to honor a deceased family member). This aspect of donor-advised funds also helps facilitate anonymous gifting.

• Most donor-advised funds allow the original donor to name a "successor” donor. This can enable other family members to become involved in the gifting process.

• Gifts can be made to local charities (churches, animal shelters, etc.) or national charities (Red Cross, Salvation Army, etc.).

• Donor advised funds are simple to establish and have relatively low minimum contribution levels ($5,000) compared to other charitable gifting techniques.

We are available to help you establish a charitable gifting strategy that fits into your specific financial plan. If you have an interest in donor advised funds or other charitable gifting strategies, please contact Chip Hymiller, CFP® or Erin Campbell, CFP®, CPA/PFS with Beacon Financial Strategies at (919) 321-8625.

Beacon Financial Strategies is an independent financial planning, tax and investment advisory firm. Beacon works with clients on a consultative and objective basis to help them achieve their personal financial goals. Beacon professionals specialize in the following areas of financial planning: retirement feasibility planning, estate planning and coordination, tax minimization strategies, and wealth management services. For more information, visit Beacon's Web site at www.BeaconFinancialStrategies.com.