Donor-advised funds are the fastest-growing philanthropic planning vehicle in today’s wealth management marketplace. Donor-advised funds have risen dramatically in popularity over the last several years. Total assets held in these vehicles grew nearly 12 percent in 2015 to reach $78 billion by the beginning of 2016.
Donor-advised funds are popular because they allow an individual or family to make a tax-deductible transfer that qualifies as a charitable contribution, and then later recommend gifts to favorite charities from the fund when the time is right. A donor-advised fund operates a lot like a checking or savings account just for charity, and it’s established according to the IRS guidelines that create the tax advantages.
How can you connect this trend to your work with your clients? Here are three pointers.
1. Talk the talk.
Your clients are hearing about donor-advised funds. Make sure they are hearing about them from you! Whether your clients support a few charities or many charities each year, a donor-advised fund is a useful tool. Furthermore, the tax advantages set the donor-advised fund apart from other vehicles. Your clients will expect you to be knowledgeable.
2. Know the options.
Donor-advised funds are available through a variety of providers. Community foundations are uniquely positioned to offer donor-advised funds with the inherent tax and transactional benefits you and your clients expect, plus the added advantage of deep community knowledge and a well-connected team of experts to enrich your clients' experience with philanthropy.
3. Walk the walk.
Consider establishing your own donor-advised fund with the Community Foundation. In today's social impact culture, clients want to work with well-rounded professionals who are connected to well-respected community institutions. The team at the Community Foundation would be honored to work with you and your family to meet your own charitable giving objectives. We're always looking for donor stories to share with others, too, so keep that in mind as an option to celebrate our work together.
IDEAS FOR USING THIS ARTICLE
Along with this article, consider offering the following links to credible third-party sources to reinforce your knowledge of philanthropic planning and connections to experts across the country. For example:
A free white paper generously made available by the legal experts who presented at the National Conference on Philanthropic Planning in 2016.
An article in Trusts & Estates Magazine outlining the advantages of using both donor-advised funds and private foundations in philanthropic planning.
A free white paper about the various ways a charitable remainder trust can be used in philanthropic planning.