Create Your Own Charitable Fund
- By DailyWorth Team
- August 03, 2011
![Charity Plant]()
One of the pleasures of accumulating wealth is that you can give back to the charities and causes you care about. And charitable giving can also give you a nice tax break.
If you’re looking to donate while also getting some tax relief, consider a “donor-advised fund” which gives you a tax break today on tomorrow’s gifts.
How it works:
You fund the account. You’ll likely need at least $5,000—$10,000 in cash or investment shares to get started. To get the most tax-bang for your buck, consider contributing appreciated stock or fund shares. This way, you won’t owe capital gains taxes when the shares are sold.
Your account grows tax-free. Typically you can invest in preselected groups of mutual funds, which can hold stocks, bonds or cash—your call. Ideally, your account earns money, so you’ll have more to give away.
You dole out grants pretty much as you see fit. Grants must be made to approved charities—usually one that has a 501(c)3 tax status. You also may be required to make a certain amount of donations over a set period of time—say, $500 over 7 years. You won’t owe any taxes on grants.
If this sounds intriguing, be sure to talk to a tax pro.
Share the wealth: How do you give back?
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