How donor-advised funds can help with year-end planning


Donor-advised funds (DAFs) have increasingly become the charitable vehicle of choice over the last 10 years for both advisors and clients. DAFs can be established very quickly, are easy to explain, simple to use, have many tax benefits, appeal to a wide variety of donors, and come without charge. DAFs now outnumber private foundations by nearly three to one.

The end of the year is when many DAF accounts are established and when many individuals contribute to their already-established DAFs. This is largely because these individuals:

  1. Have met with their CPA and other advisors to do year-end tax planning and discuss any recent or anticipated liquidity events;
  2. Have a good idea of their expected income for the year so they can determine how much they want to donate;
  3. Receive requests for donations from their favorite nonprofit organizations;
  4. Feel more generous around the holidays and see stories about people in need; and
  5. Gather with their families over the holidays and have discussions about many items, including family possessions, estate plans and philanthropy.

Talk with your tax advisor about charitable planning to make sure you donate as efficiently and effectively as possible.

To read the full Accounting Today article by Ken Nopar, click here.