Keep charitable giving alive year-round with a donor-advised fund
Donor-advised funds are a “one-stop shop” to manage your charitable giving, offering convenience, flexibility and tax advantages
GIVING IS LIKELY TOP OF MIND FOR YOU AT YEAR-END, as nonprofits tend to be more insistent in their appeals. But don’t you often wish there were a more organized and thoughtful way to make a difference year-round? A way to plan for a more powerful and long-lasting impact?
If so, consider a donor-advised fund (DAF), a more structured way of giving that has been steadily gaining popularity with donors.
A donor-advised fund account (DAF) is a personal charitable giving account most often funded with gifts of appreciated publicly traded stock, mutual funds or cash. You also can make contributions of complex assets, including illiquid and nonfinancial assets ― such as closely held business interests, commercial or residential real estate, timberland, farms and ranches, as well as gas, oil and mineral rights ― without incurring capital gains taxes.
DAFs compare favorably with other structured ways to organize your charitable giving. They allow you to avoid the higher costs, administrative hurdles and annual distribution minimums of a private foundation. In addition, a DAF is easy to set up and maintain, and you can manage all your giving activities online.
For clients who value privacy, DAFs, including the Bank of America Charitable Gift Fund (CGF) ― provide two layers of confidentiality. You can name your fund after your family or choose a name unrelated to you. And with each grant, CGF clients may elect to have their name and the name of their fund accompany each grant or remain anonymous.
There are many ways a DAF could potentially help you simplify your giving year-round, and for years to come. Donald Greene, National Donor-Advised Fund Executive at Bank of America Private Bank notes five of the primary benefits.
“Donor-advised funds are designed to meet the needs of a wide variety of donors.”
DAFs offer immediate, market-rate tax benefits
You can put a lump sum into a DAF and then have the fund distribute cash to organizations of your choice at your own pace. “Doing so gives you immediate, market-rate, maximum charitable deductions, while grants can be made to your favorite charities over an extended period,” says Greene. You can also carry forward any unused charitable income tax deduction for up to five years while assets in the fund can grow tax-free, maximizing your impact.
DAFs offer flexibility
Donor-advised funds are designed to meet the needs of a wide variety of donors. The CGF, for example, offers clients access to more than 1.4 million IRS-approved charities in the CGF directory of nonprofits. Some donors are just starting out as philanthropists and are looking for help in determining how best to make a charitable impact, while other donors know exactly the charities they want to give to, how much they want to give and when. For these donors, the database may serve simply as a place to find appropriate addresses or contact information.
DAFs allow your contributions the potential for growth
A DAF keeps assets invested in your charitable giving account while you determine which charities will receive grants, what the amounts will be and when they will be given, in line with your charitable goals. The CGF offers donors eight different investment objectives from which to choose, each with a distinct strategic asset allocation. Portfolios are customized to your goals and time frames, and they provide you with a choice of sustainable, actively-managed and passive (all ETF) portfolios. This customization, along with professional management of your assets, may allow your contributions to continue to grow free from capital gains obligations and potentially enhance the overall charitable impact of your gift.
DAFs organize your giving in one place, providing convenience
Rather than practicing “checkbook philanthropy” by making donations to individual charities and requesting receipts from each, you can streamline the administrative process through a DAF. The CGF has exceptional digital capabilities. Your account can be managed online with ease and security. You have the ability to make grant recommendations and update investment objectives online on the MyMerrill or Bank of America Private Bank app or online portal. You also are able to set up single or recurring grants anytime using the bank’s secure website. The CGF performs all administrative tasks, including regulatory reporting, helping to free up your time.
DAFs enable you to give with purpose and receive recognition
DAFs sit squarely at the intersection of passion and purpose, says Greene. “Giving through the CGF, a donor-advised fund is an opportunity for clients who want to make charitable contributions now, but also determine how and where to distribute these funds over time,” he notes. “You can be very purposeful, strategic and impactful.” In return, you will receive gratitude from the nonprofits you support and the personal satisfaction of knowing that your gifts are making a difference in the world.
Depending upon how important privacy is to you, a DAF allows you the option of giving your chosen non-profit your name or allowing you to remain anonymous.
Ask your advisor for more information on how a donor-advised fund works, and whether the Bank of America Charitable Gift Fund might help you meet your giving goals.
Donor-advised fund and private foundation management are provided by Bank of America Private Bank, a division of Bank of America N.A., Member FDIC and a wholly owned subsidiary of Bank of America Corporation.
Donor-advised fund management is provided by Bank of America Private Bank, a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). Trust, fiduciary, and investment management services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A. and its agents. Brokerage services may be performed by wholly owned brokerage affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”). Merrill is a registered broker-dealer, a registered investment adviser and Member SIPC.