Understanding Donor-Advised Funds (DAFs)
The Flexibility and Control of DAFs
"Funded with cash or other assets, donor-advised funds give charitably minded investors control of when and where their funds are distributed.”
Many Americans are feeling charitable these days, and with good reasons. It’s a hard time for many, and if you are financially able, making donations may help you feel you are making a difference for others during uncertain times. There are many options when making donations, and the recent article “Choosing Charity: How Donor-Advised Funds Benefit Your Contributions” from Fort Worth Magazine explains your choices.
Opening and Funding a Donor-Advised Fund
Anonymity and Advisor Involvement in DAFs
You may also determine the investments within the fund, level of risk and overall investment strategy.
Another good reason to use DAFs: the sponsoring organization becomes the donor of record. Therefore, DAFs are an excellent way to make anonymous contributions.
Why Choose a Donor-Advised Fund Now?
Tax Benefits of Donor-Advised Funds
Why is now a great time to use a Donor-Advised Fund?
Creating a Win-Win Situation with DAFs
Some investors have highly appreciated assets that could lead to a significant tax liability, if they were sold right now. DAF offers an alternative—rather than sell the assets and pay taxes, putting them into a DAF can achieve the following:
- You receive a tax deduction,
- There are no capital gains taxes, and
- Your chosen the charity that fully benefits from the funds.
- The pandemic has left many people facing uncertainty.
Therefore, now isn’t the right time for everyone to open their wallets and a DAF. However, if you are charitably-minded and in a financial position to benefit from a DAF, it is a win-win situation for all concerned.
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