Individuals and couples without children are increasingly recognizing the benefits of donor-advised funds, often with the help of their financial advisors. Consider these six ways donor-advised funds can be used in these unique scenarios:
1. Timed Funding
- Most donor-advised funds are established now and funded throughout the client’s lifetime.
- Others establish a donor-advised fund now but contribute to it later or at death.
2. Timed Distribution
- Rather than depending on heirs, establishing a donor-advised fund with a disposition plan can recommend grants be made to specific charities upon the donor’s death.
3. Privacy
- Many donors create a donor-advised fund to remain anonymous to charities during their lifetime and avoid solicitation.
- Those same donors may wish to remain anonymous in their posthumous giving. Or, they may wish to leave a legacy that lives on. A donor-advised fund can do both.
4. Impact
- Some couples use donor-advised funds to give over time to avoid making large gifts to any one organization.
- Others use the fund to recommend one or more large gifts after death.
5. Minimize Taxes, Maximize Charity
- Some donors name their donor-advised fund as beneficiary of their individual retirement account (IRA) and leave other assets to heirs. This often leaves more to both heirs and charity.
6. Legacy
- Many couples or individuals without children name siblings, other heirs or friends as successor advisors to their donor-advised fund.
- Occasionally business owners who don’t have children will establish a corporate donor-advised fund so their business can engage employees to fund causes in their community.
Reprinted from the American Endowment Foundation.
