Donor Advised Funds: A Smart Way to Give to Charity

Charitable donations exceeded $335 billion in 2013. It’s encouraging to see giving bounce back from the 2008 downturn — just as the stock market, real estate, and incomes have largely recovered.

So what’s the smartest way to give your money? There are some profound tax benefits to donating stock or other appreciated assets, but most people continue to donate cash. A great bet: a donor advised fund, which allows for a more strategic approach to your giving and offers a number of benefits. Donor advised funds are a financially wise way to give to your favorite charities — and make an even bigger difference in the long run.

6 Benefits of Donor Advised Funds

  1. Donations are tax-deductible in the year made.
  2. You can either give directly to a charity or invest for greater returns down the road.
  3. You can donate stock or other valuable assets. This a fantastic benefit if you have highly appreciated stock — you can deduct the current value without paying capital gains taxes. You can give even more to charity or keep more in your pocket.
  4. Administrative ease: Make one donation to the donor advised fund, then recommend grants to multiple organizations by clicking a few buttons online. This information is stored from year to year.    
  5. You can optimize your tax deductions. This is specifically helpful for those with lumpy incomes — bonuses, stock options, commission, or consulting income that can be high or low. You can also give an amount to cover several years’ worth of donations. Make your donor advised fund donations in years when your income is highest, and you’ll be in the highest tax bracket.  
  6. Extend the reach of your philanthropy by selecting a donor advised fund that offers impact investments aligned with your values so that your investments are working toward what matters to you. ImpactAssets offers a wide array of impact investments in our Advised Fund, and you can start donating with just $5,000. Additional contributions can be made for just $250.    

Go ahead and give; give smart, and you can actually give more.

Beth Stelluto is a member of the DailyWorth Connect program. Read more about the program here.

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