Donor-advised funds: Working hard for our community
Donor-advised funds are a popular charitable giving tool. This is a good time to consider a DAF for your clients.
In recent years, donor-advised funds have been one of the fastest-growing philanthropic planning tools in the marketplace. Donor-advised funds are popular because they allow an individual or family to make a tax-deductible transfer that qualifies as a charitable contribution, and then recommend grants to favorite charities from the fund when the time is right. A donor-advised fund operates a lot like a checking account for charity, and it’s established according to IRS guidelines that provide tax advantages for the donor as well as administrative efficiencies.
In the midst of the COVID-19 pandemic, giving from donor-advised funds at community foundations is accelerating. This is creating a significant boost for nonprofits and people in need. Indeed, the global healthcare crisis is precisely the reason that many donors established donor-advised funds in the first place: To be ready to give when needs are the highest.
According to a recent survey conducted by the Community Foundation Public Awareness Initiative, grants from donor-advised funds among the 64 community foundations surveyed increased nearly 60% in March and April 2020 compared with March and April 2019.
To be sure, donor-advised funds can be an important “lifeline” for community organizations during periods of hardship, as noted by Bruce Hopkins, a University of Kansas School of Law professor.
Consider working with your clients to activate their existing donor-advised funds or establish new donor-advised funds to help respond to the needs created by COVID-19. A donor-advised fund helps the community right now and also allows your clients and their families to build a nest egg to address our community’s needs during future crises.