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Donor-Advised Fund or Private Foundation: Which is Better for Older Donors?
Americans over 70 had a net worth of almost $35 trillion in 2021, and an estimated $70 trillion is expected to change hands through gifts and bequests by 2042. Of that, at least $9 trillion is expected to flow to charities.
As you advise older clients, part of the conversation can help them determine the best charitable giving vehicles to achieve their goals. Two important options include donor-advised funds and private foundations.
Here are key talking points to consider:
- A donor-advised fund at HCF costs nothing to set up, and ongoing fees are minimal.
- It takes less than a week to set up a donor-advised fund. That’s much quicker than a private foundation, which requires establishing a legal entity through state and IRS filings.
- Gifts of hard-to-value assets like real estate deliver better tax benefits when given to a donor-advised fund than a private foundation.
- Donors can take a cash deductible up to 60% AGI with a gift to a donor-advised fund, compared to a cap of 30% of AGI with a gift to a private foundation.
- Administration of a donor-advised fund through HCF is simple, with no tax filings required.
Sometimes, both a private foundation and a donor-advised fund can be useful tools to meet a client’s charitable giving goals. At HCF, our experts can help you develop a structure for your client that maximizes the benefits of each vehicle with an overall philanthropy strategy. To learn more, contact Jen-L W. Lyman, Director of Planned Giving & Advisor Relations, at (808) 566-5596 or jlyman@hcf-hawaii.org. We’re always available to answer your questions about philanthropy or schedule a personal consultation with you and your clients.
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