Tag Archives: Donor Advised Fund

Happy 2014 to all of our donors, investors, and partner organizations!

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seven facesDecember 2013 was very busy for the Stewardship Foundation as we orchestrated almost two dozens donations through our various DAF’s and CRT’s which was music to the various partner organizations and charities that we benefited. Thank you to all our donors and investors who made positive impacts on the organizations we support!

As 2014 unfolds I know that you must continue to assess your financial situation. The decision you make will determine the levels of support we give to the charities we support. One area of concern that some donors will face involves rising estate tax exemptions. Therefore, I am including an article on this subject, which you can read in full from our website.

I highly recommend that our partner organizations pass this information on to their major donors.

For our partner organizations and charities if you have not read the The Seven Faces of Philanthropy: A New Approach to Cultivating Major Donors, then you should. The more you understand the type of donors you have, the better you can understand their motivations and their obstacles in giving. And of course, the Stewardship Foundation can assist you in this process.

Donor Advised Funds and why Private Foundations need them

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A donor-advised fund (DAF) is a separately identified fund or account that is maintained, operated, and legally controlled by a section 501(c)(3) organization like The Stewardship Foundation. In this month’s article, we list why owners of private foundations may want to covert to DAFs with The Stewardship Foundation.

Man working in home officeReason #1. Save time and money

Private foundation owners pay for lawyers, accountants, and office supplies, but with a DAF, owners advise how the funds are used, yet avoid the administrative cost. In some cases, as much as 50%. Cutting costs makes the money go further.

Reason #2. Less hassle

DAFs relieve philanthropists of the hassles of running a foundation. No more tedious paperwork or fact checking potential recipients. For larger foundations, no hiring, firing, or worrying about staff.

Reason #3. More privacy

DAF funds are relatively anonymous because there are no requirements to disclose as much information about their charitable giving. Privacy ensures that philanthropists can support causes that operate within their personal value system, ethical standards, or call to Christian conscience. Private foundation tax forms are public information, exposing operational details and even personal information.

Reason #4. Smaller donor investment fees

Small foundations often pay relatively high fees to the firms that handle their investments. On the other hand, donor funds work with a much bigger pool of money from all the accounts we administer, so fees are lower.

Reason #5. More generous tax deductions

Donors get an immediate tax deduction when they contribute to a fund from their private foundation, but with a DAF, deductions are more generous – instead of a limit of 30% to a private foundation, donors can deduct cash contributions up to half their adjusted gross income each year. There are other tax advantages for appreciated-security donations, and investment gains are generally tax-free (no excise tax).

Reason #6. Protected legacy

DAF funds protect the original intent of the founder. After a founder’s death, family members may disagree on the direction that the private/family foundation should take. They may begin to direct funds to causes contrary to the founder’s moral or ethical values. To protect the legacy intent of the founder, the foundation’s assets can be split among several accounts at donor-advised funds, and those accounts can then be used for different purposes.

If you are interested to learn more about converting from a private/family foundation to donor advised funds, we recommend a recent Wall Street Journal article by Jillian Mincer where she raises the question whether it is time for private foundation owners to convert to donor advised funds.

“Deduct Now, and Give Later”

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The New Year is almost here and the giving season is in full swing. People are donating to charity more than usual and they must make numerous decisions during uncertain tax law changes.  With the fiscal cliff deadline just weeks away, we know changes in government spending and taxes are looming. One major tax change Taxpayers fear is that Washington will cut tax deductions for charitable gifts as soon as next year.

This very concern is addressed in a recent Wall Street Journal article titled “Deduct Now, and Give Later”. Author Laura Saunders highlighted the value of Donor Advised Funds as she offers the following scenario where a Donor Advised Fund would make sense to set up before 2012 ends:

“…a couple earning $200,000 gives $20,000 in cash to a charitable fund this year. They take a 2012 deduction for $20,000, and the money goes into a subaccount in their name at a sponsoring nonprofit organization.

Once in the subaccount, the money is invested and can grow tax-free until the couple designates eligible groups to receive it, at which point there isn’t any deduction. There isn’t a required annual payout, so the couple might give nothing in 2013 and then a large donation in 2014, to one church, charity or school—or many. The sponsor handles all tax paperwork, and some allow payouts of as little as $50.” 

The Stewardship Foundation can assist donors and investors in setting up a Donor Advised Fund and help them receive a tax deduction for 2012 up until December 15, 2012.

For more explanations and charitable giving ideas, visit our ‘Donors’ Webpage.