Making Giving Smarter (Not Harder

By Kellie Smith Director, Foundation

In recent years, we’ve seen a seemingly never-ending stream of tragedy in the news - most recently, Hurricane Ian devastating communities across Florida. 2022’s market volatility and rising inflation has left many with less disposable income, pitting our compassion to help against worsening economic anxiety and financial constraints. However, in my role as the Director of the Foundation, I work with donors who continue to respond to these everyday urgent needs with support for charities working on the ground. It’s not that Jewish Foundation donors are immune to financial anxiety, but that many of them took strategic steps that now allow them to maintain their philanthropic commitments. For many of these donors, it comes down to their donor-advised fund.

A Donor-Advised Fund (DAF) is like an investment account strictly for charitable giving. A donor establishes a fund and can then donate a variety of assets to be eligible for an immediate tax deduction. Those funds can be invested for tax-free growth, and donors can choose to recommend grants to qualified public charities immediately or over time. One of the beauties of the donor-advised fund is its ability to help you give more to the causes you care about. The fund makes it easy to donate long-term appreciated assets - like stock or mutual fund shares directly to charity instead of selling it first. This can allow you to give up to 20% more to charity. This can be a flexible, effective tool to pair with a wide-range of strategies for smarter, more efficient charitable donations. A recent survey among DAF holders demonstrates just how strategic and practical charitable giving can be.

DAF account holders think of charitable donations as more than a budget line item. Nearly all say they first established their DAF to optimize their charitable donations for both charities and their own tax benefit. There are a variety of ways the DAF can help you potentially minimize your tax burden while creating a larger donation for charity: tax. More than half of donors establish a DAF to minimize capital gains tax owed on appreciated assets. Donating long-term appreciated securities directly to charity - instead of liquidating the asset and donating the proceeds - can provide dual tax benefits. Your donations are eligible for an income tax deduction for the full fair-market value of the asset, and capital gains tax on the asset can be eliminated. This one strategy can help maximize both your tax benefit and the overall amount you have available to grant to charity.

Leverage your DAF through “bunching” - consolidate multiple years of giving into one tax year to increase tax

savings. This strategy allows you to surpass the itemization threshold, and then take the standard deduction in off years. Millennial donors are more likely to establish a DAF to take advantage of this strategy. They are often still ramping up their charitable donations and bunching gives them the boost they need to save on taxes, while still allowing them to continue regular support for their favorite charities.

Invest charitable funds

for tax-free growth. 44% of DAF holders cited tax-free investment growth on their charitable assets as a motivation for opening their fund. Once it’s established, donors may recommend an investment strategy for their account - potentially growing their initial contribution and providing more dollars to grant to charity.

These are just a few of the ways that DAFs enable mutually beneficial strategies that can create more valuable outcomes for both the donor and the charities they support. In addition to the financial and tax-related benefits, many donors also choose a DAF for administrative reasons like these:

Centralize giving into one

hub. More than half of DAF holders established a DAF to better organize their giving. Funneling all your charitable dollars through a DAF is streamlined and efficient - whether you recommend grants to one charity or 100, your tax recordkeeping is all in one convenient location.

Build a charitable legacy.

Account holders use their DAF to support their charitable giving goals now and in the future. (continued on page 6)

[Making Giving Smarter, continued]

Nearly three in ten Baby Boomer donors opened a DAF to support their giving in retirement, while 22% wanted to create a charitable legacy to pass on.

Strategize for the future.

A third of donors open a DAF to prepare for future gifts to charity. Sometimes, they have a large chunk of money to give away - from the sale of a business or another windfall - and they simply need time to figure out their plan. Others open a fund so they can put aside money over time for a bigger gift, like establishing a scholarship fund. With its flexibility, there’s something to address a wide range of needs no matter your stage of life, financial situation, or charitable objectives.

There’s no time like the present. Year-end is the perfect time to work with your advisor in crafting a giving plan that’s aligned with your goals and ensures you’re making the most efficient charitable decisions. It’s the best gift you can give yourself and the charities you love.

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