What vehicle do young tech billionaires, retired farmers and kids too young for a driver’s license share? Donor-advised funds. This increasingly popular charitable vehicle is highly customizable for clients’ philanthropic, tax planning and financial planning needs. Its ease of use and numerous giving options make it the charity vehicle of choice for many clients.
Vehicle of Choice
Donor-advised funds are the fastest growing charitable vehicle for a reason. They have low maintenance fees compared to private foundations and charitable trusts. Most funds permit donors to have their portfolio managed by their financial advisor. Donor-advised funds are also easy to establish and use. Their incredible flexibility offers solutions for individuals and families giving from a few thousand to a few billion dollars to charity. These factors make donor-advised funds perfect for people in most stages of life.
No matter what stage of life your client and their dependents are, there is often a donor-advised fund solution.
Minor children. While adult advisors make legal decisions in traditional donor-advised funds, children can gain philanthropic and business skills by participating. Children can help in everything from naming the fund, to budgeting, to suggesting grants for charity. Adults can also name children successors to donor-advised funds. Some fund administrators provide youth options that offer children more formal involvement.
Young adults. From entrepreneurs with IPO-related financial- and tax-planning needs, to young adults receiving an inheritance, donor-advised funds offer charitable solutions. Donor-advised funds run on your client’s busy schedule. They permit decision making when your client has the time, and eliminate most administrative tasks to save time.
Middle-aged adults. Adults in their 50s open more donor-advised funds than other age group. Many individuals and families create a “living legacy” with their funds, watching the impact of their charitable grants. Many also use donor-advised funds in their estate planning. Most clients realize tax advantages by making gifts of appreciated assets, executive bonuses or proceeds from business sales to their funds. The asset and tax efficiency of donor-advised funds helps maximize the dollars going to charity.
Older adults. Similar to middle-aged adults, many older adults seek financial and tax planning benefits from their donor-advised funds. Many clients take advantage of a higher tax rate deduction by making pre-retirement gifts to their funds while they are working. This can maximize their charitable giving dollars in retirement.