Beyond Tax Season: The Advantages of Donor Advised Funds
After tax season, many clients look for ways to strategically manage their charitable giving. Donor advised funds (DAFs) offer an ideal solution for clients who want to give without immediate pressure to select specific charities.
Take for example, Jennifer and Mark Yee. When the Yees sold their family business last year, their CPA suggested they open a DAF at HCF to offset their significant tax event. By contributing part of their proceeds to a DAF, the Yees received an immediate tax deduction and had time to thoughtfully decide how to distribute their philanthropy.
Worth a Reminder: DAF Basics
DAFs are popular because they allow an individual or family to make a tax-deductible transfer that qualifies as a charitable contribution, and then later recommend gifts to favorite charities from the fund when the time is right. A donor-advised fund operates a lot like a checking or savings account just for charity, and it’s established according to the IRS guidelines that create the tax advantages.
How can you connect this trend to your work with your clients? Here are three pointers.
1. Talk the Talk.
Your clients are hearing about donor advised funds. Make sure they are hearing about them from you! Whether your clients support a few charities or many charities each year, a DAF is a useful tool. Furthermore, the tax advantages set it apart from other charitable options and strategies.
2. Know the Options.
DAFs are available through a variety of providers. Community foundations like HCF are uniquely positioned to offer DAFs with the inherent tax and transactional benefits you and your clients expect, plus the added advantage of deep community knowledge and a well-connected team of experts to enrich your clients' experience with philanthropy. HCF has the best in-depth knowledge of what it really takes to make a difference in the community. With a wide range of relationships at their fingertips, HCF staff are in touch with the techniques and tools to help your clients’ giving make the difference they want to see in the causes they care about. In addition, a DAF at HCF gives clients a wide range of options for successor advisors and for the charities they want to support.
3. Walk the Walk.
Consider establishing your own DAF with HCF. In today's social impact culture, clients want to work with well-rounded professionals who are connected to well-respected community institutions. The team at the community foundation would be honored to work with you and your family to meet your own charitable giving objectives. We're always looking for donor stories to share with others, too, so keep that in mind as an option to celebrate our work together.
If you have questions about how DAFs might be right for your clients, HCF is here for you. Contact Jen-L W. Lyman, Senior Director of Gift Planning and Advisor Relations, at (808) 566-5596 or jlyman@hcf-hawaii.org.
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