Broker Check

Joliet, IL and 
Lemont, IL and Oak Forest, IL
Orland Park, IL and Wanatah, IN
Wilmington, IL and Valparaiso, IN

Financial Advisors & Reps
in Illinois & Indiana


Donor Funds

| July 23, 2019
Share |

A donor-advised fund is like a charitable investment account, for the sole purpose of supporting charitable organizations you care about. When you contribute cash, securities or other assets to a donor-advised fund at a public charity you are generally eligible to take an immediate tax deduction. Then those funds can be invested for tax-free growth and you can recommend grants to virtually any IRS-qualified public charity.

When you give, you want your charitable donations to be as effective as possible. Donor-advised funds are the fastest-growing charitable giving vehicle in the United States because they are one of the easiest and most tax-advantageous ways to give to charity. Let’s take an in-depth look at how a donor-advised fund works.

From a tax standpoint you get an immediate deduction that can be taken as an itemized deduction on your Schedule A which may produce a significant tax savings. This can be used as an offset if you are claiming “income Items” in a given year such as a Roth Conversion. Let’s say you convert $100K from your IRA to your Roth, this would count as income in the year of conversion and if your tax rate is 25% you would pay $25K of additional Federal Income Tax. But if you contributed an additional $100K into a donor fund you could then take a deduction of $100K and in effect pay no tax due to the Roth conversion and the Donor Fund.

Another reason for a donor fund is if you have an infusion of cash, maybe due to an inheritance, and are in a charitable mood and want to give some or maybe all of it away but don’t know where right now. By using a donor fund the money can be “given”, the immediate tax deduction taken now and the money “placed” with the appropriate charity at a later date.

Donor Funds are a powerful tool in the Estate Plan Toolbox, I would encourage you to talk to us about this option. Please give us a call so that we can apply specifics to your financial life.

Share |