When donors and their families are asked why they chose to open a donor advised fund, they mention one or more of the following:
1. Want a means to express their unique charitable intentions.
2. Provide convenience of gifting.
3. Streamline their giving – keep track of grants, amounts, and giving history.
4. Benefit from tax advantages and simplicity over other giving options.
5. Want continuing involvement in grant makin at levels right for them.
6. Establish a means to educate children and pass along family values.
7. Enjoy flexible options to manage the levels of recognition or privacy that they desire.
8. Create a lasting legacy.
The 7 Tips: Choosing the Best Donor Advised Fund for You
The following is a simple list of questions that a potential donor needs to consider when figuring out what donor advised fund may be best for them and their interests:
1. Affiliations
Is the organization that sponsors a donor advised fund affiliated with another entity (for-profit or non-profit), or is it independent? How might these affiliations help or hinder the donors’ use of a fund now or in the future?
2. Contributions
What types of assets are eligible for contribution (ex: cash, marketable securities, closely held securities, real estate, life insurance)? In some cases, the best opportunity that a donor has to give is through the donation of illiquid assets. Is there a requirement that the contributed asset be immediately liquidated?
3. Investments
What investment choices are available to you? Are contributions pooled, meaning that the dollars donated are pooled with other donors for investment purposes?
Can the dollars be separately managed in their own investment account? Can your financial advisor play an ongoing role in providing investment services for your donor advised fund?
4. Grant Distributions
Are there restrictions on grant distributions (i.e. geographic, religious, etc.)? Is there a minimum annual distribution requirement that you the donor must give, or a maximum annual limit that restricts how much you want to give away?
5. Succession
How flexible are the provisions for succession upon your death? Is involvement limited to you and your spouse? Or as the donor, can you name other successive advisors such as children or other individuals of your choice?
6. Online Access
Does the program offer the ease of secure online access to your account?
7. Costs
Is there a set-up fee or termination fee? What is the annual administrative fee? Are there hidden fees in the fine print, such as minimum account level charges?
Does the organization require a certain portion of the fund to be set-aside for its own purposes? Most importantly, will they allow you to transfer the fund in the future to another DAF administrator, or are your funds held permanently by the initial administrator?
These are just seven tips to consider when choosing which DAF is best for you. If you would like to have a conversation with someone about setting up a donor advised fund, reach out to the Trust Point team at 800-658-9474.
Reprint with permission from American Endowment Foundation, for the original article visit, https://www.aefonline.org/
