Too often, we think about charitable giving in the context of the rich and powerful, where, it seems, the rich keep getting richer via some complex charitable strategy. While there are significant tax benefits to properly structured charitable giving, the reality is much less exciting. You will save some percentage of your gift, if you do it properly, but you’ll always end up with less money than you started with. That’s the point: You’re giving away money.
When it comes to charitable planning, charitable intent must be the first box you check. Once you have decided you can afford to give and that you want to give, you have to decide how you’ll give. A donor-advised fund (DAF) may be that “how.” Put simply, a DAF is a financial account that allows you to make tax-deductible contributions of cash or assets, invest the money in the account tax-free and then recommend grants out of the account to your favorite charities over time. The tax deduction is recognized at the time you put the money into the DAF, regardless of when the money makes it to your charity of choice.
