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What are Donor Advised Funds and How Do They Work?


Based on critical factors, like the current economy and stock market, it may be the ideal time to contribute to a Donor Advised Fund (DAF). Here’s why: creating a DAF provides an easy, low-cost opportunity to be more intentional in helping the causes they care about, while also taking advantage of charitable tax deductions.

It’s a powerful, tax-incentivized way to use appreciated assets to that empower personal philanthropy to address the issues that you care the most about.

That’s why we are sharing what this type of fund is, how it works and how to set one up – typically in less than 24 hours.

Benefits of a DAF

By contributing to a donor-advised fund, donors:

  • Can transfer a variety of asset types into the fund, such as cash, appreciated securities, life insurance, and even real estate.
  • Receive an immediate tax deduction in the year in which the fund was established.
  • Can donate to the charities they are passionate about consistently, over time. Donors make their own grant recommendations to qualified nonprofits on their own timeline; it’s all about what works best at that time.
  • Enjoy simplified tax reporting by reducing paperwork and the need to itemize charitable contributions.
  • Are empowered to support the causes they care about effectively and efficiently on a faster timeline.
  • Can recommend grants from the fund anonymously.

The great thing about a donor-advised fund is that it’s step one in making philanthropy more intentional. Because you’ve now come to a mindset that you have a fund that is for philanthropic purposes. At the same time, because of its administrative benefit, it allows you to be more spontaneous.

When a donor finds a new charity they would like to donate to, they can rest assured that RSF Foundation staff will be there to guide them and make donating easy.

One of the greatest benefits I have experienced from having a donor-advised fund at RSF Foundation is the expertise of the staff. They are there as much or as little as donors need them. Last month while on vacation, my wife and I found a new cause we wanted to support. With the help of the staff, we were able to make a donation a few days after we got back from our trip. The ability of RSF Foundation to customize their approach to each donor is of great benefit.

Who is making the investment decisions?

Here at the Rancho Santa Fe Foundation, we are proud of our volunteer investment committee, comprised of highly regarded investment professionals. The committee members are knowledgeable about the global economy, investment markets in general, and devoted to stewarding donor assets with transparency and integrity.

Why is NOW a good time to open a donor-advised fund?

The summer of 2017, may be an ideal time to open or contribute to a donor-advised fund.

  • We are in the ninth year of a stock market rally since the Great Recession of 2008. Equity markets are at all-time highs, supported in large part by a sustained accommodative monetary policy that has driven interest rates to record lows.
  • This appreciation in assets provides the donor with an opportunity to donate these assets to a DAF and avoid paying much if not all of the capital gains tax if the assets were sold and then proceeds were donated.

Timing is everything. Most people become more intentional about giving during the holidays, at the end of the year. However, philanthropy can and should be 365 days a year activity. Many nonprofits have a fiscal year-end in June or October. Being aware of the timing of contributions to a certain non-profit can have a deeper, timelier impact. A donor-advised fund makes this easy and efficient because the required funds have been set aside in the DAF

How to Set Up a Donor Advised Fund at RSFF

I truly believe in the power of donor-advised funds; it’s why my wife and I use ours regularly. I don’t know why anyone would not strongly consider it as a viable option. There are so many benefits. And it makes sense in the current market. Uses them himself. “I don’t know why anyone does not strongly consider a donor-advised fund. It just makes too much sense given all the benefits. And makes it sense in the given market.”

To learn more about these benefits, we invite anyone interested to contact the Rancho Santa Fe Foundation directly. Our team will be happy to speak or meet with you and walk through the simple process of setting up the fund.

To get started, simply call or email us here.

Looking to share a quick piece on the key benefits – perhaps with a spouse or family member? Here are 6 Fast Facts About Donor Advised Funds.