The Benefits of Donor Advised Funds

The Benefits of Donor Advised Funds

What is a Donor Advised Fund?
A donor advised fund (DAF) is simply a fund set up by a donor and administered by the Community Foundation of Grant County. A donor can establish a DAF, receive an immediate tax benefit that year, and then recommend donations be given from that Donor Advised Fund to charities immediately or at any time for as long as the fund exists. Additionally, donations may be made to a DAF at any time.

Standard Tax Deductions 2019
• $12,200 for Single / Married Filing Separately
• $18,350 for Heads of Household
• $24,400 for Married Couples

DAFs and Bundling
With higher standard deductions for taxes starting in 2018, some donors are choosing to BUNDLE their giving in order to continue giving at the same levels as before. This means donating two- or three-years’ worth of giving at one time in order to claim the charitable deduction that year. (See example below.)

One wise way to bundle is by creating a DAF at the Community Foundation. This gives the you the option to bundle your donation the first year and then continue to support the charities of your choice, at the same level annually as you had been before the tax changes, but by making the donations directly from your DAF.

How Bundling Works:

Donate 2 years’ worth of giving to your DAF at the Community Foundation: $50,000 for example.

YEAR ONE
Recommend that 2 grants be made in Year 1 to your favorite charities: 

YEAR TWO
Recommend to the Foundation that 2 grants be made from your DAF to your 2 favorite charities Year 2:

YEAR THREE
Repeat Year 1 and donate 2 years’ worth of giving to your DAF.

Charity A: $10,000
Charity B: $10,000
Remainder: $30,000 remains in your DAF for grantmaking next year.

Charity A: $10,000
Charity B: $10,000
Remainder: $10,000 keeps your DAF open.

Itemize your deductions.

Take the standard deduction.

Itemize your deductions once again.

(The IRS does not allow Required Minimum Distributions to be given to DAF’s.)

Types of Gifts:

Donate Gifts of Cash
Donors can now deduct up to 60% of adjusted gross income for contributions of cash—up from 50%. If your cash donations exceed that limit, you can carry forward any unused deductions for five years.
Donate Gifts of Appreciated Stock
When you donate stock, you can deduct the full value of the stock at the time you donate it and avoid tax on the appreciation or capital gains.
Donate Non-cash Assets
You can also donate other non-cash assets, such as real estate holdings or art collections. The charitable deduction will depend on the type of asset and whether it is put to a related use.

 

Contact the Community Foundation of Grant County, Indiana, Inc. for more information about establishing a Donor Advised Fund or other charitable giving opportunities by phone or email at 765-662-0065 or SayHello@GiveToGrant.org.

 

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