FAQ Frequently Asked Questions
What is a Donor Advised Fund?
A donor advised fund is a charitable giving vehicle wherein an
individual, family or corporation makes an irrevocable, tax-deductible
contribution of personal assets to a charity and at any time thereafter
can recommend grant distributions to qualified charitable organizations.
is the difference between Donor Advised Funds and Private Foundations?
Starting a private foundation can involve substantial start up
costs and administrative expanses, such as the yearly filling of
a Form 990-PF. But one of the most important differences is that
Donor Advised Funds receive more favorable tax treatment than a
private foundation. Donor Advised Funds allow donors to take a federal
income tax deduction up to 50% of adjusted gross income (AGI) for
cash contributions and up to 30% of adjusted gross income (AGI)
for appreciated securities; versus 30% of AGI for cash contributions
and 20% of AGI for appreciated securities for a private foundation.
Donor Advised Funds also offer the ability to recommend grants anonymously,
if desired. It is also possible to convert a foundation over to
a donor advised fund to simplify on going maintenance and record
Why contribute to a Donor Advised Fund rather than directly to
Donor Advised Funds provide a number of benefits that direct donations
to a charity may not, including:
Ability to accept and process appreciated securities an which
the donor does not have to pay capital gains tax.
Variety of investment options allowing the contribution to
potentially grow over time.
Capacity to receive one block of securities that can benefit
Creation of a legacy versus providing a one time gift.
Separation of tax planning and charitable giving, donor receives
tax deduction when contribution is made, but grants to charity
can be made later.
Simplicity, a single contribution can benefit multiple charities
while only requiring one tax substantiation letter.
Who should be listed as the donor?
The donor is the person or persons responsible for making the contribution(s)
to the Donor Advised Fund. If the contributions are from joint ownership,
then multiple donors can be listed. If the donor wants non-contributors
to have grant making rights to the account, they should name those
individuals as account advisors.
What is an account advisor?
An account advisor is named by the donor to recommend grants from
the account. An account advisor is usually a spouse, child or relative.
What is an account successor?
An account successor is the person identified by the donor to take
over the account after the donor's death. Multiple successors can
be named to an account and, depending on the donor's wishes, the
account can be split equally among the successors, or they can share
the responsibilities. Successors can name future successors to take
over the account in the event of their own death, essentially leaving
a legacy from one generation to the next and so on.
What is a charitable beneficiary?
A charitable beneficiary is a charitable organization(s) identified
by the donor to receive either all of the remaining assets of the
account or 5% of the account annually upon the death of all the
original donors. This is done as an alternative to naming an account
Can an account be named after someone other than the donor?
Yes, donors can choose any name for the account. However, it is
recommended the name reflect the donor's name and/or the main purpose
of the account such as "The Jones Family Foundation."
Notably, each grant has the ability to be recognized by either donor
name, account name, anonymously or by special acknowledgment (for
example, In memory of, In Honor of).
When is contribution a considered a charitable donation?
A contribution is complete when the asset is out of the donor's
control. The time frame varies depending on the type of asset and
when it's transferred to the account. The process usually takes
less than two weeks.
What is the minimum to establish a Donor Advised Fund?
The lowest Donor Advised Fund we work with has a minimum of $10,000.
We're independent financial advisors and work with many different
Donor Advised Funds and can help you select the funds that most
closely match your requirements.
What types of assets can be contributed?
Cash, mutual funds, bonds, most publicly traded securities and
real estate on a case by case basis. Please give us a call to help
review your holdings to determine if they are appropriate for use
in a Donor Advised Fund. If for any reason a fund can not accept
a contribution, it will be returned to the donor's account of origin.
Can I contribute foreign stocks?
Yes, if they're traded on domestic stock exchanges. If they're
not, please contact us prior to donation so we can have the security
properly reviewed by a Donor Advised Fund.
What type of asset is best to contribute?
Appreciated securities that have been held for more than one year
make the most effective contributions. You can avoid the capital
gains tax on the securities and can deduct the total value of the
contribution from your federal income taxes, up to 30% of adjusted
gross income. Unused deductions can be carried forward for 5 years.
Because of these advantages, you are able to give more to the causes
What charities and nonprofits can grants be made to?
Grants can be made to charitable organizations that are tax exempt
under Internal Revenue Code Section 501 (c ) (3 ) and public charities
under Internal Revenue Code Section 509(a ). Grants can be made
to private operating foundations but cannot be made to private no-operating
foundations. Most established religious organizations and educational
institutions are not listed as 501 (c )(3 ) nonprofits but are nevertheless
tax-exempt charitable organizations.
How many grants can be made in a year?
There is no limit to the number of grants made out of an account.
Most Donor Advised funds have a minimum grant amount that can be
as low as $500.
The information contained on this site is for educational purposes
only. It is not intended to be professional tax or legal advice;
consult the appropriate professional regarding your specific situations.
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