Understanding Donor-Advised Funds: And Why Open One?
Presented by Shabri Moore, CFP®, AIF®
Charitable giving is an important piece of many individuals’ financial and estate plans. Beyond the tax advantages offered by charitable donations, many people have personal reasons for giving to charities. A number of vehicles are available to facilitate charitable giving, apart from a straight gift of cash or property to an institution. To help you decide how to incorporate charitable giving into your estate plan, let’s look at one popular option.
Donor-Advised Funds A donor-advised fund is managed by a public charity for the purpose of distributing funds to other charities. The donor makes gifts to the fund throughout their lifetime and may make suggestions regarding the distribution of the assets to specific charities.
A contribution to a donor-advised fund is generally tax-deductible in the year it’s made. If cash is donated, the maximum deduction is typically capped at 60 percent of the donor’s Adjusted Gross Income (AGI). If a donation of highly appreciated assets is made, the deduction is typically capped at 30 percent of the donor’s AGI.
A donor-advised fund may be an excellent vehicle for those who wish to donate a moderate to large amount of capital. The startup costs are usually low, and the minimum donation is generally $5,000 to $10,000. With many of these funds, the donor can advise the fund to make grants to multiple charities or to a single charity. Additionally, many funds do not have a minimum annual grant amount, which means that the donor’s principal may grow tax free over time.
Special thanks to: Shabri Moore, CFP®, AIF®, Moore Wealth 50 Carroll Creek Way, Suite 335 | Frederick, MD 21701 301.631.1207 | www.moorewealthinc.com shabri@moorewealthinc.com Advisory services offered through Moore Wealth, a Registered Investment Adviser.
