Spontaneous Generosity: Can Donor Advised Funds Enhance Your Charitable Impact?

“I want the ability to be spontaneously generous!”

I talk to a lot of people about their goals and visions for the future and people just light up whenever this goal comes up (quite often).

$370 Billion was gifted by individuals to charities in 2023 (source: Giving USA).

Charitable giving can feel good for the donor, lead to really cool things happening in communities AND lead to tax deductions. All great reasons why gifting to charities happens. Often people give directly to charities through direct donations. Another way happens through planned giving happens through wills or trusts. Another way is through Donor Advised Funds.

As a result, we are talking about Donor Advised Funds today- A great way to be charitable, take advantage of tax deductions and be in control of where your money is going. This blog will chat about what is a Donor Advised Fund, how it works and why donor advised funds are among the fastest forms of giving.

As a result, we are talking about Donor Advised Funds today- A great way to be charitable, take advantage of tax deductions and be in control of where your money is going. This blog will chat about what is a Donor Advised Fund, how it works and why donor advised funds are among the fastest forms of giving.

What exactly is a Donor Advised Fund?

A donor advised fund (sometimes referred to as DAF) is like a charitable investment account. You have the ability to contribute to this account, get an immediate tax deduction and then you decide when to distribute grants to your favorite charities. People tend to like donor advised funds because it is a flexible and efficient way to manage charitable giving while maximizing tax benefits.

How does a Donor Advised Fund Work?

The donor would fund the Donor Advised Fund with cash, securities (stocks are an example) and mutual funds. You get the immediate tax deduction.

Then you can distribute grants to charities when you want to.

In between the time that you fund the donor advised funds and distribute grants, the money inside of the donor advised fund can also be/stay invested and grow tax deferred.

Why are Donor Advised Funds Part of the Conversation?

Donor Advised Funds offer tax advantages, flexibility, and convenience. Donors get an immediate tax deduction when they put money into the donor advised fund and the money grows tax deferred while they are deciding how to distribute the money. The flexibility offered through giving you control of when you get the tax deduction from donating to the donor advised funds and then you can choose which charitable organization gets the donation and when you gift them. The convenience offered by a donor advised fund is the ease of setting it up- you can start with one deposit and then add more money after the fact. Also you can grow the donations through professional management while you are determining what charitable organizations to gift.

We talked about what donor advised funds are, how donor advised funds work and why they are part of the conversation more often these days. After hearing about Donor Advised Funds (DAFs) are, what are your thoughts?

Stay Spontaneous, Stay Informed, and Stay Empowered!

Brianna Beski is a financial advisor and CDFA at Raymond James, based in Colorado. She focuses on helping people have confidence in their financial futures. For the rest of the story, please visit her website or email her at brianna.beski@raymondjames.com.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Brianna Beski and not necessarily those of Raymond James. Please

note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters. Raymond James does not provide tax or legal advice. Please consult your own legal or tax professional for more detailed information on tax issues and advice as they relate to your specific situation.

Raymond James & Associates, Inc., member New York Stock Exchange/SIPC

Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes.