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The Value of a Donor Advised Fund

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Plenty of people are discussing the benefits of a donor advised fund for individuals, but even fewer are discussing the opportunities a donor advised fund can present for charities’ fundraising. As you know, charities are constantly looking for ways to increase their donations to make a bigger impact on the cause they are geared to help. A donor advised fund (or DAF for short) may be an option the fundraising team hasn’t considered yet.

Creating a Win-Win Scenario

             The rise in popularity of the DAF is largely due to the tax code changes America has witnessed over the past couple of years. Individuals are using them to increase their charitable donations for their itemized deductions. They also benefit from the tax-free growth of their investments and other perks.

Charities, on the other hand, may want to look into utilizing a DAF. They can establish a pooled donor advised fund under their name. Once the DAF is established, individuals can open a DAF for themselves sponsored by the charity. By doing so, they are able to enjoy all the benefits as if they had opened one on their own. In addition, depending on the account value, it may be more cost effective for the individual than opening a DAF on the open market.

Once the individuals have established their DAF under the charity, the charity has the option to implement what we refer to as a donation rule. This donation rule sets a certain percent of each account value that must be contributed directly to the charity at year-end. This is an effective way to create a win for the charity’s funding as well as a win for the individual and their charitable giving.

Implementation

            This is another solution we have found for our clients. It benefits charitable organizations as well as individuals. We partner with a company we have an outstanding relationship to help take care of the administrative work for the DAF. This will take quite a bit of work off the charity’s plate. While they handle the administrative work, we help by investing the funds exactly in line with the charity’s wishes. We develop an investment strategy to help sustain charitable giving for the long-term. As you can tell, this process presents plenty of complex decisions to make. We are happy to sit down with you and walk you through our complimentary introductory process to establish a donor advised fund. We take pride in helping everyone understand all their options. The best way to begin this process is by emailing me at matt@falconwealthadvisors.com. Thanks for reading!

– Matt Johnson

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Falcon Wealth Advisors is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.