Philanthropy Enabled Through Donor Advised Funds

in Charity
When you are thinking about your legacy your first objective is going to be to make sure that your family is well provided for, and this is as it should be. But what do you do next to make a difference and address some of the societal need that exists?

We were recently reminded about the importance of philanthropic giving by two of the richest men in the world: Warren Buffet and Bill Gates. They issued a challenge to their fellow billionaires, asking all of them to pledge that they will eventually give away half of their wealth. You have to give Buffet credit for setting an example because he has given $8 billion to the Bill & Melinda Gates Foundation to date. He says that he intends to give away virtually of his wealth incrementally over time.

A lot of people are interested in giving something back when they are planning their estates, but few are in a position to start their own family foundations. You could make donations to individual charities, but this is time consuming, record keeping is difficult, and many smaller charities are not set up to accept gifts of stock and other securities.

A viable solution for those who are looking for an efficient charitable giving vehicle would be the donor advised fund. With these funds you place assets with a third party such as a community fund, a charitable giving program, or a financial services company that houses a charitable fund. This entity owns the assets so you remove them from your estate. But you as the donor retain advisory status so you can let your wishes be known with regard to how your contributions are invested and which charities will receive endowments.

There are tax advantages to the donor as well. If you contribute appreciated securities you can deduct their full market value but no capital gains taxes are applicable to the transaction. Plus, you can make a single contribution toward the end of a year to take advantage of the deduction in a quick and efficient manner with no pressure to make any decisions about which charities receive the endowments.
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Philanthropy Enabled Through Donor Advised Funds

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This article was published on 2011/03/29