And (not so) suddenly, it’s a thing: What’s up with donor-advised funds?
For nearly 90 years, charitably-minded individuals and families have established donor-advised funds to help carry out their philanthropic wishes. Popularity of the donor-advised fund steadily grew, especially beginning in the 1990s, eventually resulting in official recognition in the Internal Revenue Code under 2006 tax law updates. Today, over one million donor-advised fund accounts hold nearly $160 billion in charitable assets, according to the latest numbers.
The growth of the donor-advised fund as a useful charitable giving tool has made this vehicle something of a celebrity. You and your clients no doubt have begun to see articles about donor-advised funds pop up in mainstream financial publications, as well as in academic journals. And yes! We read those articles, too! A top priority for our team is keeping up with proposed legislation and commentary about charitable giving, including particular vehicles such as donor-advised funds.
As you talk with your clients about options for their charitable giving plans, please reach out. We would be happy to share perspectives and ideas that take into consideration current trends and legislative developments.
To that end, you and your clients may find it helpful to review the types of funds available through YouthBridge Community Foundation, which include donor-advised funds and much more.
First, as you’re likely aware, a “donor-advised fund” enables a client to establish a specific account for charitable giving. Your client makes a tax-deductible contribution of cash or other assets to the fund, and then recommends grants to favorite charities during the current year and in future years depending on the client’s goals and plans.
Second, YouthBridge has its finger on the pulse of the community’s most pressing issues. An “unrestricted fund” provides your client with an opportunity to support community needs that can’t be identified until the future. One of the biggest benefits of a community foundation is its perpetual structure that allows support to nonprofits to evolve over time as priorities in the region shift.
Third, to target charitable giving to specific areas of community need (such as education, health, environment, or the arts), your client can set up a “field-of-interest fund” to establish parameters for grant making under the ongoing guidance and expertise of our staff. Plus, field-of-interest funds can be a wonderful alternative to a scholarship fund and accomplish a client’s charitable goals even more efficiently and effectively.
Fourth, a “designated fund” allows a client to focus charitable giving on a specific agency or purpose. Over time, our staff manages the distributions from the fund according to the terms the client establishes.
This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. If you have any questions or would like to discuss your giving strategy, please contact us.