It sounds like this must be something for the wealthy, is it? Why should I even read about a Donor Advised Fund? How would it benefit me and my family? The answers to all these questions are important to understand as a Donor Advised Fund is a great tool you can use in your charitable giving.
What is a Donor Advised Fund (DAF)?
A DAF is a charitable investment and giving account for the purpose of supporting the ministries you care about. A DAF must be administered by a 501(c)(3) public charity such as the United Pentecostal Foundation to manage charitable donations on your behalf. This provides you with many benefits.
Is a Donor Advised Fund only for the wealthy?
NO! A DAF can be used by almost everyone. Once you understand the principles and purpose you quickly see the benefits. It is a “giving account” or tool that can be an exciting, efficient addition to your charitable giving toolbox.
How does a Donor Advised Fund work and what are the benefits?
- Gifts are managed until you decide who and how much you want to give to a ministry later. As the donor, you make the gift decisions.
- Gifts receive an immediate tax deduction.
- DAFs can be funded with cash, stocks, mutual fund shares, life insurance, retirement assets, Bitcoin and other cryptocurrencies, private business interests, and other assets.
- You can avoid capital gains by giving appreciated assets, potentially saving taxes.
- You grow your donations tax free. While you are deciding how much and which ministry you want to give to, the DAF is invested. Then all earnings are providing additional funding to your favorite ministries, tax free!
- You choose your preferences in investment strategy for your DAF in the United Pentecostal Foundation: aggressive, moderate, etc.
- It is a great way to leave a legacy. Your DAF can become like a private family foundation, leaving a legacy without you hiring investment managers and reporting annually to the IRS. The United Pentecostal Foundation takes care of managing the investment and the required reporting. It is a low-stress, cost-effective way to leave a legacy.
- When you pass away or are unable or don’t want to manage your DAF, you can nominate your children, grandchildren, or someone else to make grant/gifting decisions. It is a great way to teach your children and grandchildren how to give.
- DAFs are not just for individuals or families; a company or business can set one up.
- Grant gifts can be made totally anonymously. Or not. It’s up to you!
- You can choose what to name your DAF, for example, “The Insert-Your-Name-Here Family Fund.”
- You do NOT need to be a millionaire to set up a DAF. It can be established for as little as $5,000.00.
- If you want to maximize tax savings, a Donor Advised Fund can help by “bunching” your giving. Bunching is forecasting the charitable gifts you intend to make over a future period into a single year, so the charitable deduction is larger in the year of gifting. Then you take maximum standard deduction in the years no charitable gifts are made.
In short, if you are looking to create a lasting legacy of giving, contribute to the ministries closest to your heart, and cash in on some substantial tax savings, a Donor Advised Fund could be your answer. If you are interested in more information you can read more on our website at https://unitedpentecostalfoundation.com/donor-advised-fund or contact us at:
United Pentecostal Foundation
Stephen M. Drury, President
Kent Russell, Director of Planned Giving
36 Research Park Court
Weldon Spring, MO 63304
Phone 636.229.7900
E-mails info@upcistewardship.org | smdrury@upci.org
Steve Drury
Stephen Drury is the founding President of United Pentecostal Foundation and United Pentecostal Church Loan Fund. He is retired from directing The Stewardship Group serves in a consulting role. He is also co-founder of LifeSprings.