A donor-advised fund is created with an initial transfer of appreciated securities or cash into a special "account" enabling the donor to report the gift in the current tax year, with the option to distribute to public charities in the future. Past and future gains on the investments in the DAF are tax-free.
(1) A potential immediate tax deduction for the full value of the gift, plus (2) the benefit of including, tax-free, the unrealized gains of the appreciated gifted asset. The combination of these two can greatly improve the gifting power of your assets.
Clients have used their DAF to 'bunch' donations into one tax year for improved tax-efficiency, to diversify concentrated holdings while avoiding the LT cap. gains tax hit of up to 37%+ in CA, and/or to organize planned giving instead of reactively pulling out the checkbook or credit card.
It's also the easiest way gift to a charity that is not set-up to directly receive non-cash donations.
DAF management is included as a part of IMPACT Platinum's Comprehensive Wealth Management service level and is available a la carte with IMPACT Gold and IMPACT Digital. There is no minimum size with many of the DAFs we work with.
A not so daffy option for getting started is to try out Daffy.org. Let us know how it goes. It is a new company that we're testing out.
We can integrate the investment management of your DAF as part of your overall portfolio management
The most efficient way to fund your DAF is by transferring securities with significant unrealized capital gains: up to 30% of your AGI. This can be integrated with our tax-aware reblancing. On a case-by-case basis more complex assets can also be gifted. For example, interests in appreciated leveraged real estate may not be out of the question, depending on the DAF.
Donor-advised funds cover their expenses by charging an adminstrative fee. The annual admin fee is typically around 0.6%/year on the first $500K, declining significantly for larger accounts. This is in addition to any fund fees (expense ratio, etc.) and investment advisory fees, if any, depending on how the assets are managed inside the DAF account.
"I have taxable savings. How can I get permanent protectection from taxes?"
Move up to $7,500/year, per spouse/child and, much like compound interest, the benefits accrue with time.
Move up to $73,500/year into your Roth with a custom 401(k) plan.
+$7,500/year via the Backdoor in 2023
Modern Wealth Management
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