By Stephen C. LandeA donor advised fund is a charitable giving vehicle offered by nonprofits and for-profit financial service companies. It is a flexible, convenient, low-cost alternative to the private foundation, easily established with a simple fund agreement and an initial gift. Once established, your client, your client’s family or anyone your client designates may recommend grants from the fund to any qualified charitable recipient at any time. Both future contributions and grants can be timed to your client’s maximum advantage. Meanwhile, the fund’s assets are invested by the sponsoring charity and the yield of those investments is your client’s to grant as well.
Donors initially decide how their funds will be named and who should be authorized to recommend grants. They contribute tax-deductible assets to establish their fund, advise the sponsoring charity on how the assets should be invested and recommend grants from the funds to charitable organizations of their choice. The sponsoring organization does the record keeping and due diligence.
Donor advised funds maximize the tax benefit of your client’s philanthropy. Since the sponsoring charity is recognized by the IRS as a public charity, gifts of appreciated securities (owned for more than a year) are deductible up to 30 percent of the donor’s gross income at their fair market value on the date of the gift and there is no capital gains tax on the appreciation. Other forms of appreciated assets can be contributed as well. Contributions of cash are deductible up to 50 percent of the donor’s gross income. Any unused portion may be carried forward and deducted over the next five years. In a year when a client anticipates an extraordinary income or capital gains tax liability, a donor advised fund provides a shelter while putting in place resources to fund their present and future charitable contributions.
A donor advised fund is a combination of convenience, cost savings and tax advantage that is difficult to beat. Some other features of donor advised funds:
Many sponsoring charities including the Greater Miami Jewish Federation have significant community planning resources in place to help your clients refine and fulfill their charitable objectives and evaluate the impact of their philanthropy.For more than 75 years, the Greater Miami Jewish Federation has been a unifying force for Jewish community-building and philanthropy. The federation works to enrich the quality of Jewish life in Miami-Dade County, in Israel and around the world by bringing comfort and hope to the vulnerable and by investing in programs that build Jewish knowledge, identity and peoplehood.
Most sponsoring charities, including the Foundation of the Greater Miami Jewish Federation, allow their donors to manage their donor advised funds securely online. Donors can check fund balances, recommend grants or review fund activity 24/7. Of course, The foundation offers personal support for those donors who are averse to conducting their philanthropy online.
Donor advised funds simplify your client’s record keeping — a single tax receipt for the gift made to a donor advised fund may cover it all.
Grants from donor advised funds and even the funds themselves may be anonymous, so unlike private foundations, the donor’s identity can be protected if that is requested.
With no minimum distributions, donor advised funds can function as charitable savings accounts as well as charitable checking accounts. Donors can build a pool of social capital for a major project or for granting by subsequent generations.
The Foundation of the Greater Miami Jewish Federation is Miami’s Jewish community foundation. It promotes philanthropy through active partnerships with individuals and families seeking to achieve their charitable goals. It supports the mission of the Greater Miami Jewish Federation through the acquisition, professional management and distribution of capital resources. The foundation is proud to be the charitable sponsor of one of Miami-Dade’s largest donor-advised fund programs.
In summary, think of a donor-advised fund as a “charitable bank account” you can establish with as little as $5,000. Such a fund allows your clients to make charitable contributions and realize significant tax advantages, both when the time is right for them. There is no annual qualifying distribution requirement for a donor advised fund. No meetings, corporate record keeping, taxes or tax returns are required and administrative charges are minimal.
For more information about donor advised funds at the Foundation of the Greater Miami Jewish Federation, please contact Foundation Director Steve Lande at slande@gmjf.org or by telephone at 786-866-8623, or consult jewishmiami.org.
Steve Lande has been director of the Foundation of the Greater Miami Jewish Federation since November of 2002. Prior to joining GMJF he directed the Jewish Federation of Greater Pittsburgh’s endowment program for 18 years. A native of Iowa, Lande earned a law degree from Drake University and practiced law in Des Moines before joining the professional staff of the Pittsburgh Jewish Federation. Also admitted to the practice of law in Pennsylvania, Lande is an expert in charitable gift planning.
South Florida Legal Guide Midyear 2014 Edition