How Do Donor Advised Funds Work?

Charitable Giving is tax deductible up to 50% of AGI. A great option is Donor Advised Funds. You set up a “Family Giving Fund” (you name it) and donations to the fund are tax deductible immediately. You have charitable intent and dollars to give yearly but haven’t decided on the receiving charities. The dollars are invested as you direct and they can grow and increase allowing for greater gifts than you ever expected. All money from the donor advised funds must go to charities and allowable foundations at some future time but in the meantime they can grow with the markets as you study the charities you will enhance. With the use of mutual funds there are minimal fees and expenses. Some accounts will accept appreciated securities as donations and you can escape paying the capital gains you would pay if you sold the security and then gave the money to charity. When ready to make donations to charities, you give directions to the Donor Advised Fund to send out checks to your choice charities and the accounting is also done for you. Franklin Templeton Investments is one fund group that has made arrangements to help you set up your personal Donor Advised Fund. It’s a handy tool and a great way to increase your tax deductions assuming you have true charitable intent.

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