Charitable Giving

Donor-Advised Funds

What is a Donor-Advised Fund?

Donor-advised funds are charitable investment accounts that can be opened at many of the major brokerage firms, such as Charles Schwab and Fidelity, or at a local community foundation. Two of the biggest advantages of donor-advised funds is the flexibility they offer to donors and their tax advantages.

Individuals with a donor-advised fund can contribute to the account any time. The money in the account is invested and grows tax free. The donor-advised funds function as a personal charitable giving fund for the donor as the donor advises on the timing, amount, and recipient of any charitable donations from the account. Donations from the donor-advised fund must go to public charities.

Donor-Advised Funds Tax Benefits

Donor-advised funds are considered to be tax-exempt public charities. Contributions to a donor-advised fund are tax-deductible in the year of the contribution. This is an advantage when the donor makes a large contribution in one year as they can recognize the tax benefit of the charitable donation even though the donor-advised fund may distribute that money to public charities over several years.

Contributions to a donor-advised fund can be made in the form of cash or securities. Contributing appreciated stock or mutual fund shares can be particularly advantageous. If the appreciated asset donated was owned for more than one year, the full market value is tax-deductible for the donor. The donor effectively removes the asset and any of its future appreciation from their gross estate and the donor avoids any capital gains tax on the appreciation if the investment is sold within the donor-advised fund.

Many donor-advised funds allow the donor to name a successor advisor for the account. This way, individuals can provide heirs with an opportunity to continue charitable giving.

Interested in more information related to charitable giving? Click here or contact us at 775-850-5620.

Alyssa Yocom is a Wealth Manager with Schultz Financial Group Inc.

Schultz Financial Group Inc. (SFG) is a wealth management firm located in Reno, NV. Our approach to wealth management is different from many other wealth managers, financial advisors, and financial planners. Our team of fee-only fiduciaries strives to help our clients build their wealth across four capitals: Financial Matters, Physical Well-being, Psychological Space, and Intellectual Engagement. We provide family office and wealth management services to clients located in Nevada, California, and other states. If you’d like more information, please check out our website or reach out to us via our contact page.

  • Schultz Financial Group, Inc. (“SFG”) which is a registered investment adviser, drafted this blog post for its website and for the use of its clients or potential clients. Any other distribution of this blog post is strictly prohibited. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that SFG has attained a certain level of skill, training, or ability. While the content presented is believed to be factual and up to date, it is based on information obtained from a variety of sources. SFG believes this information is reliable, however, it has not necessarily been independently verified. SFG does not guarantee the complete accuracy of all data in this blog post, and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of SFG as of the date of publication and are subject to change. This blog post does not constitute personalized advice from SFG or its affiliated investment professionals, or a solicitation to execute specific securities transactions. SFG is not a law firm and does not intend for any content to be construed as legal advice. Readers should not use any of this content as the sole basis for any investment, financial planning, tax, legal or other decisions. Rather, SFG recommends that readers consult SFG and their other professional advisers (including their lawyers and accountants) and consider independent due diligence before implementing any of the options directly or indirectly referenced in this blog post. Past performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by SFG, will be profitable or equal any historical performance level. Any index performance data directly or indirectly referenced in this blog post is based on data from the respective copyright holders, trademark holders, or publication/distribution right owners of each index. The indexes do not reflect the deduction of transaction fees, custodial charges, or management fees, which would decrease historical performance results. Indexes are unmanaged, and investors cannot invest directly in an index. Additional information about SFG, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and Form CRS is available upon request and at https://adviserinfo.sec.gov/firm/summary/108724.