A large number of people give annually to charities but are concerned about the high administrative rates. However, donor-advised funding makes it possible to give to charities without having to endure hefty costs or handle administrative issues. This way, donors can save significant amounts of money by channeling the funds via a donor-advised fund rather than to the charities directly.
What are the perks of using donor-advised funds for charitable giving?
- Appreciation of donations
You can promptly boost your grant through post-donation appreciation. And, this is because you can donate to your (DAF) donor advised fund in a short period, and you may even grant this amount to the charities later on. The appreciation of your investment in all these years will lead to large donations to your preferred charities. Besides, assets in the DAF account will likely grow at an expedited rate due to tax exemption.
- Simplified process
With donor advised funds, you make a single donation of appreciated securities to the donor-advised funding. You also confer smaller amounts of money to all your preferred charities, and this makes it easier to manage everything administratively. All you need is a substantiation letter using the DAF and different letters in case you’re making donations to charities separately.
As such, with donor-advised funding, it’s easier to contribute appreciated securities. You can as well automate the process to help in transferring cash to your select charities. Moreover, the DAF sponsor helps with all the bookkeeping and any other administrative work.
- 3. Privacy and anonymity
You can receive gifts as well as donor-advised funding anonymously. Although grants from a donor-advised fund may include the donor fund name, they can also be anonymous, and it’s not easy for others to tell the source of funds.
- Easy setup & Low costs
You can easily set up donor-advised funding charities, and this is because the funding organization administers them. You also don’t require many costs to set up, and you can do this with little or no start-up costs. Moreover, there are no legal, filing, or accounting costs required to set up. With this simple donation process, it becomes easier for donors to do tax planning.
- Better planning
Donor-advised funds accept contributions from a variety of assets as well as privately held stocks, real estate, and other investments. With donor-advised funding, there’s an excellent estate planning and all donations made are taken from the donor estate instantly. This way, it’s easier to fund charities for a more extended period due to lessened potential estate taxes.
- Creation of a giving legacy
With this type of funding, you can easily involve your kids and family members in picking out charities. And this inspires and teaches them about philanthropy. You can as well assign all your kids successor advisors, and this will extend the advice on grants to your loved ones way after your demise.
Final thoughts
Donor-advised funding is propitious to families in a myriad of ways. They help donors to save considerable sums of money with no need to hire staff since all the administrative tasks are catered for by the funding organization. The process is simple, with high levels of privacy and confidentiality.
