February 3, 2020

We often hear that friends like you choose to support many charitable causes in addition to the kids at Mercy Home. And frankly, we think this is terrific. There are so many worthy ways to make our world a better place!

But we also hear about the burden that comes with splitting your philanthropic dollars among many different charities: the check-writing, the tax letters, and the stacks of mail to name a few. If this sounds familiar, you may be interested in simplifying your giving with a Donor Advised Fund.

A Donor Advised Fund (DAF) is a simple, flexible tool which allows you to manage and maximize your giving to support the causes that matter most to you. A DAF gives you the ability to make a single significant gift to support multiple charities, and lets you simplify your annual and lifetime giving.

What is a DAF?

You might think of a DAF as a kind of charitable checking account: you fund it with cash, stocks, or other assets, and receive an immediate tax deduction when you do so. You then decide where to direct this giving, and how best to support the work of your favorite charities, like Mercy Home.

You’re able to “bunch” several years’ worth of giving into a DAF and take a charitable deduction in one year while supporting your favorite charities over time. Once you’ve funded your DAF, you may choose to invest those funds before distributing to charity, and increase your impact on the causes most important to you. It’s also a great way to consolidate complex assets—such as business interests, closely held stock, or real estate—into a single philanthropic account.

Best of all? DAFs aren’t reserved for the very wealthy. They’re also a perfect fit for people of modest means who are committed to charitable giving.

DAFs offer many of the same benefits of a family foundation, but are cheaper to establish, and much more flexible to administer. And like a foundation, a DAF can be a great way to engage your family and heirs in philanthropy. Giving your children and grandchildren the ability to research their own causes and become involved in building something great can show them the importance of giving back. It’s an excellent way to teach loved ones about your values and learn more about their values as well.

Philanthropy should be approached with the same level of attention as any investment plan. The challenge is to give intentionally and effectively, so that your gifts make the greatest difference to the people and organizations who need them most. A DAF can help you do all of this, while maximizing your impact and simplifying your giving.

Benefits of a Donor-Advised Fund

Deductibility. You may be able to take an immediate income tax deduction each time you make a gift. Contributions of appreciated stock avoid capital gains taxes.

Flexibility. You can give when and where you want. Take your time deciding how to designate your giving. There is no deadline for making distributions.

Simplicity. A DAF is easy to set up and helps you avoid the extensive bookkeeping and check-writing that is often involved in charitable giving.

Versatility. You can make gifts to your DAF using cash, appreciated securities and a variety of other assets.

Multiplicity. You can make a gift of one large asset to your DAF, and use it to fund many charitable organizations.

Privacy. You can designate your grants anonymously if you wish.

Family. You can engage your family in philanthropy. Teach your children and grandchildren the joy of giving back, and learn about their passions as well.

Legacy. You can ensure that your legacy continues on by leaving instructions with your heirs directing them to give. Giving from your DAF through your estate can also simplify your charitable estate bequests.