Financially Smart Ways to Give to Charity. Be More Financially Efficient with Charitable Giving.

One key conversation to have with a financial advisor is about smarter ways to align your philanthropy with your financial plan. More than ever, the adoption of something called a Donor Advised Fund (DAF) is readily available at approachable account-size minimums. These accounts have transformed giving, making it easier, more effective, and—dare we say—more fun to give.

(We at Compass Ion Advisors would be privileged to have a conversation with you about setting up a DAF along with the ways it can improve both your financial plan and your giving impact.)

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A DAF is like having your own private family foundation that allows those with philanthropic goals to have their charitable assets professionally managed in its own, separate portfolio. The gift that funds a DAF (like appreciated stock, ETFs or mutual funds, most commonly) are considered irrevocable gifts, which makes the donation eligible for a tax benefit in that year. The donor-advised fund is then invested and managed based on the client’s charitable goals. The donor no longer controls these assets (it was a gift after all) but becomes the designated “requestor” who can recommend grants be made to qualified charities of their choosing with no time constraints or deadlines.

With recent changes to the tax code and more people taking the standard deduction ($24,800 for married filing joint / $12,400 for single filers) and not itemizing their charitable gifts, we’ve recommend that clients “bunch” their giving across multiple years into making one, larger gift. This can bump someone into an itemized tax return in a particular year, ensuring a greater tax benefit. Funding a DAF might also make sense in a particular year where one anticipates a higher income, offsetting a potentially larger tax bill. In the end, gifting to a DAF for a particular tax benefit requires careful coordination between a financial advisor and a tax advisor, but the benefits are clear.

In our experience with clients, the most anticipated benefit of gifting to your own DAF is the culture of philanthropy that develops within the family. We’ve heard wonderful stories of families collaborating on which charities they’d like to support and involving their children, young or old, in the decision-making process. The truly lasting benefit of a donor-advised fund is that these accounts can name beneficiaries, instilling a culture of philanthropy for future generations to come.

If you’d like to learn more about donor-advised funds or would like help setting one up we would be honored to help.

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“This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable. This presentation may not be construed as investment advice and does not give investment recommendations.

Additional information, including advisory fees and expenses, is provided on Compass Ion’s Form ADV Part 2, available upon request or at the SEC’s public disclosure site, https://adviserinfo.sec.gov/firm/summary/166418. As with any investment strategy, there is potential for profit as well as the possibility of loss. Past performance is not a guarantee of future results.