Investing for a better tomorrow is Bedell Frazier’s professional purpose. Investing in our younger generation is ground zero for that cause. We’ve been proud supporters of MEF for years. It’s the active involvement from the community that makes our public schools great. And as you know, Moraga schools are amongst the best of the best.

 

Smart money strategies are always relevant. If you’re looking for a strategic and creative way to support MEF, you might consider a Donor Advised Fund (DAF).

DAFs offer multiple benefits, including eligibility for immediate tax deduction while allowing flexible timing to decide which charity or charities receive the grants.

DAFs also enable donors to contribute a variety of asset types beyond cash. Common DAF contributions include appreciated stock, securities, real estate, and these days even cryptocurrencies. They can help maximize tax benefits like avoiding capital gains. Most traditional brokerage firms include Donor Advised Fund accounts on their platforms.

DAF participants are eligible for an immediate tax deduction when they contribute to the fund, even though the actual grants to charities can be made later. This can allow donors to strategically stretch gifts to charities over multiple years while getting the deduction in one tax year.

The separation of the tax event from the charitable distribution allows donors to front-load deductions in high-income years while waiting to decide on charitable recipients later. This function provides greater flexibility for tax planning and managing finances.

What’s more, Donor Advised Funds can be invested and grow tax-free. The benefit of compounded growth can increase those dollars available for charitable giving over an extended period of time.

DAFs also simplify charitable giving by consolidating donations. This facilitates the record keeping with a single tax receipt. Donors can manage individual grants to any qualified charity. They also provide opportunity for family involvement in choosing meaningful organizations.

Overall, DAFs provide an efficient, flexible, and tax-advantaged way to manage charitable contributions while sustaining long-term community impact.

Comparatively, direct giving provides a tax deduction only when the donation is made to the charity. Non-profits generally use the funds immediately. This means the tax event and the charitable distribution occur simultaneously. Of course, the financial benefit to the organization is immediate but the flexibility on tax deductions is limited.

Direct giving also requires donors to handle record keeping and reporting themselves, while DAFs simplify this by consolidating tax receipts and administrative responsibility with the sponsoring organization.

Donor Advised Funds aren’t for everyone. But they can be an effective tool for those interested and willing to support non-profit organizations while practicing smart money strategies.

If you are interested in learning more about Donor Advised Funds, Bedell Frazier Investment Counselling is happy to speak with you and answer your questions.

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