Thanks to their convenience and versatility, Donor-Advised Funds (DAFs) have continued to gain popularity in recent years. Banks, investment firms and foundations manage most DAFs. They invest contributions to maximize your charitable giving without incurring taxes.

You can decide when to transfer partial or all of your accumulated wealth to nonprofits of your choice. In the case the benefactor deceases while the account has a balance, a family member will distribute the remaining money.

Benefits of Donor-Advised Fund

A DAF offers multiple important advantages. For instance, it lets you claim a deduction on the pertaining year’s taxes without it being immediately given away to specific charities. Internal Revenue Service policies treat DAF contributions favorably. These funds also represent a relatively simple solution with low fees. They combine less volatile investments and tax-free income to boost the impact of your philanthropic efforts.

Things To Consider

Every DAF maintains different rules; you should study these policies before making a contribution. Fees and minimum deposits also vary. An experienced investment advisor can provide helpful guidance. Some DAF managers take control of accounts that remain inactive for several years. If so, the DAF managers select the non-profit beneficiaries.

Who Is It For?

People tend to prefer DAFs when they desire an efficient solution that increases the size of charitable donations while delivering a significant tax deduction in the current year. This option might also prove appealing if you seek to simplify your bookkeeping. You will be provided a yearly statement, making it easy to keep track of all philanthropic giving in a single place.

DAFs offer an effective way to invest and eventually donate money without paying taxes on the associated income. However, it’s crucial to select a suitable fund and plan your contributions wisely. Our knowledgeable wealth management advisors can help you make the most of charitable giving while pursuing your financial future. Please contact us today for professional assistance.

Pence Wealth Management and LPL Financial do not provide legal or tax services. Please consult your legal advisor regarding your specific situation.