Donor-Advised Funds

In the spirit of the holidays, now is a good time to plan not only gifts for family and friends, but also philanthropic gifts. Especially in 2020, gift giving can make a meaningful impact for recipients. 

At Shepherd Financial Partners, our mantra is Live to Give, and therefore we believe that charitable and philanthropic efforts have an important place within one’s financial plan. One strategy to accomplish your charitable giving goals is a Donor-Advised fund.

What is a Donor-Advised Fund? 

A Donor-Advised Fund (DAF), is a tax-preferred investment account specifically for charitable giving, and make up 3 percent of all charitable gifts in the U.S. The DAF is established by a non-profit (501c3) entity and receives funds from you, the donor. Funds are then distributed to charities at your direction from the DAF structure. 

You will receive an immediate tax deduction of the fair-market value of the contributed assets, but you will not have to immediately donate the full balance of your investment to charity. This provides flexibility in your philanthropic planning.

Your DAF contribution can be allocated into various investment vehicles so that it has the opportunity to grow over the long-term as you execute on your giving plan. Many DAF platforms also offer the ability to allocate into ESG portfolios to align your charitable fund with your values. 

What are the benefits?

DAFs are increasingly popular because they are easy and flexible. When giving to a DAF, you’re provided freedom and power in choosing how your gift is distributed. It is also distributed at your convenience, and you can choose when and where the donation is sent. This allows you to develop your philanthropic strategy while the charitable assets are invested in a tax-free environment. 

When you fund your account with cash or other assets, you can receive eligibility for tax deductions. Your funds grow tax free and can later be put into an IRS-qualified public charity of your choice. A DAF will provide a single tax document which simplifies record keeping and will also make sure your donation goes to the 501c3 registered organization. 

How do you start a Donor-Advised Fund?

Flexibility to choose your gift quantity and timing is helpful when planning your long-term financial goals. You can speak to your advisor at Shepherd Financial Partners to discuss options and best approaches to investing in a DAF. Reach out this holiday season to get started!

Sources:

https://www.fidelitycharitable.org/guidance/philanthropy/what-is-a-donor-advised-fund.html

https://www.youtube.com/watch?v=mQXxtr8ML38​

Disclosures:

Investment advice offered through Shepherd Financial Partners, LLC, a registered investment advisor. Registration as an investment advisor does not imply any level of skill or training.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Securities offered through LPL Financial, member FINRA/SIPC. Shepherd Financial Partners and LPL Financial are separate entities.

Additional information, including management fees and expenses, is provided on Shepherd Financial Partners, LLC’s Form ADV Part 2, which is available by request.

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