Looking for a vehicle to offload your appreciated assets without paying capital gains taxes? How about one that satisfies your desire to help those in need? A Donor Advised Fund may be the best option for you.
Donor Advised Funds (DAF) are vehicles operated by charitable institutions, such as Schwab Charitable, that allow you to discretionally distribute assets to charities. with little friction.
DAFs are rapidly growing and are considered the preeminent way to give to charity thanks to their favorable structure.
How does it work?
- Establish a charitable giving account.
- Contribute assets and receive an immediate deduction.
- Allocate the assets to charities over your lifetime.
The simplistic nature and painless setup are unprecedented in the world of charitable giving. The old school method requires an army of secretaries and involves legal representatives who drain the capital that would otherwise be benefitting the charity. Once you contribute assets to a DAF your only responsibility is deciding who will benefit from your generosity. All administrative work is left in the hands of the institution that manages the fund.
The number one advantage of a DAF is the IMMEDIATE tax deduction you will receive once assets have been irrevocably transferred to the fund. You will receive a deduction for the fair market value of the assets donated. You qualify for this deduction even if the funds will be distributed in a later year. We recommend you consult with your tax advisor to identify all tax implications.
Since the contributions will be invested at the institution until you decide how to allocate them, most people will enlist the help of an investment advisor.
Contributions can be made anytime and remain in the account indefinitely.
What can I contribute?
- Appreciated Assets
- Investments held for more than a year
Who can benefit?
- Any school
- 501(c)(3) charities
If you would like to contribute to a Donor Advised Fund and benefit from our experience with them, please reach out and we will open an account for you with Schwab Charitable. We have strategies specific to DAFs that will help you avoid paying capital gains taxes on appreciated assets.
Benefits of Schwab Charitable
- Schwab verifies charities
- You will be able to track your online giving
- Personalized grant letter on personalized letterhead to accompany your donation
- Schedule future or recurring grants online
- Select the specific purpose of the grant or donate an unrestricted grant
- Schwab generates an annual report for you
- Easily contribute directly from your Schwab investment accounts
- Option to donate anonymously