Written By: A. Alex Hammersley

Do you want to make the most of your giving and save on taxes? Depending on your circumstances, a donor-advised fund (DAF) can satisfy both goals. Let me start with a definition. A donor-advised fund is an investment account you can fund with the purpose of distributing the money to qualified charities. To know if a charity is “qualified,” it must be a 501(c)(3) and classified as public by the IRS. Private foundations are not eligible to receive funds from a DAF. Upon initially contributing money to the account, you can write off the amount as a charitable deduction. 

A good illustration of a 501(c)(3) organization is the National Center for Family Philanthropy. You can learn more about DAF-giving here: Examples of donor-advised fund case studies and success stories.

Now, I want to walk through some features of a DAF.

1. Take advantage of the tax benefit. As mentioned previously, you can contribute to a DAF and receive a tax deduction. So, in years where your income is abnormally high or when you are doing Roth conversions, instead of paying the IRS taxes you can contribute to a DAF to offset some or all of your extra income. 
2. Invest your contributions. Once you contribute to the DAF, you have the opportunity to invest the contributions. You can invest in stocks, bonds, ETFs, mutual funds, money markets, and more. The DAF gives you a nice opportunity for growth on your charitable contributions. Then, when you are ready, you can send the funds to the qualified charity of your choice. 
3. Leave a legacy. The DAF allows you to leave a legacy even after you have passed away. You can designate funds to go to the qualified charities of your choice upon your death.

Side notes: Once money is distributed from the DAF to the respective qualified charity, you do not receive another tax deduction. A tax deduction is available only for the initial contribution to the DAF. Also, cash contributions are still limited to 60% of your Adjusted Gross Income (AGI). You can contribute stocks to a DAF, which are limited to 30% of your AGI. 

If you are interested, we can help determine if a donor-advised fund is right for you. A donor-advised fund could be a win-win for both you and the qualified charities of choice. Consider the opportunity and give us a call if you have any questions.

Say What?

And you thought your parents had weird rules when you were a kid … Here are some of the oddest laws on the books in the US:

• In Missouri and New Jersey you cannot sell a car on Sunday.
• In Louisiana no reptiles are allowed within 200 yards of a Mardi Gras parade.  
• North Carolina makes it unlawful to steal waste kitchen grease. 
• South Dakota bans the use of fireworks to scare birds away from sunflower crops.
• Tennessee outlaws importing or possessing a skunk. 

This week in history

1775 – American Revolution begins with the Battle of Lexington.

1961 – The Bay of Pigs invasion began in April of 1961. 

1964 – The Ford Mustang made its debut at the World’s Fair in Flushing Meadows, New York. 

2002 – The 10,0000^th episode of “General Hospital” airs. It debuted in 1963 and was the longest running soap opera and longest-running program ever produced in Hollywood.

2016 –  Prince died at age 57, leaving behind a valuable and complicated estate with no valid will.  

If you have any questions, we’d love to chat! Call us at 844-CARLSON (227-5766) today!