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Donor advised funds offer flexibility, thoughtful giving

Did December sneak up on you?

Do you find yourself wishing you had more time to research nonprofits for your charitable giving?

A donor advised fund provides the flexibility you may need for thoughtful giving.

Donor advised funds, sometimes called charitable giving funds, allow you to make a charitable gift when and how you need to while maintaining your contributions. When you are ready, you decide which charitable organizations you want to help.

How do donor advised funds work?

These charitable giving funds operate on a Give, Grow and Grant process. Specifically:

Give – you give to a fund and receive a tax deduction
Grow – you grow your charitable assets
Grant – you grant to the causes that are important to you

Under the new tax laws, the standard deduction for those filing jointly went from $12,700 to $24,000 in 2018. Charitable gifts are still tax deductible, but it will be more difficult to realize those benefits from itemization.

A donor-advised fund can be used as your philanthropic funding tool. If you have the ability to compile several years of charitable giving into one year, you can take advantage of the tax benefits this year and then fund your charitable giving at your chosen pace.

Charitable giving funds operate much like private foundations but without the administrative burdens or paperwork.

Donor advised funds offer several advantages, including the following:

Reduced tax liability in a year of abundance – If you have experienced a “bumper crop year” through an inheritance, sale of a business or great year of investments, you may be able to offset some tax liability by creating and contributing to a donor advised fund. You can take a tax deduction this year and grant monies to your favorite charities over time.

Appreciated assets – You may donate appreciated assets. Any appreciated assets held for more than one year may be donated at fair market value, and those gifts will not be subject to capital gains tax. A tax deduction up to 30 percent of adjusted gross income (AGI) is given to the Donor and can be carried forward five years (if greater than 30 percent of the AGI).

No administrative burdens – New Braunfels Community Foundation handles the paperwork for you by issuing payment to your chosen charities.

Donor options – Donor advised funds offer select recognition or anonymity on a grant-by-grant basis, or for all of your activities.

Paying it forward – Involve your children and other relatives to preserve a family tradition of giving back to the community.

Flexibility – These giving funds offer select investment portfolio options, including personalized options with your own investment manager.

Maintaining your giving level – Build up your funds so that when income declines upon retirement, you can continue to support your favorite charitable organizations at the same level.

A charitable giving fund is ideal for the “bunching” of charitable contributions that many CPAs are encouraging under the new tax law. It can also be ideal for those in these circumstances:

            • Retiring and recognizing deferred income
            • Exercising stock options
            • Anticipating a sale of real estate or business
            • Wanting to diversify a concentration of a low basis asset
            • Companies and organizations wanting to promote giving among its employees or membersDonor

            Learn more about opening your charitable giving fund with New Braunfels Community Foundation by contacting us at (830) 606-9536 or brit@nbacf.org. Find us online at www.nbacf.org.