Take advantage of one method of charitable giving that is rapidly rising in popularity—the donor-advised fund.
Donor-advised funds allow you to make an irrevocable contribution to another organization, typically a public charity like Fidelity Charitable or a community foundation, and then recommend that the fund make grants to qualified non-profit organizations, like Holton.
The major benefits to donating through a donor-advised fund are:
- You receive an immediate tax deduction against the full amount you contribute to the fund. The deduction is up to 50% for cash contributions and up to 30% for appreciated assets, compared to a deduction of up to 30% for contributions of cash and 20% for contributions of appreciated assets to private non-operating foundations. Additionally, you avoid paying capital gains tax on contributions of appreciated assets held over one year.
- You are able to contribute complex assets, like privately-held stock, personal property, real estate, and intellectual property, to the donor-advised fund. The fund administrator then liquidates the assets and donates the funds to charities recommended by the donor. This allows the donor to avoid strict gift acceptance policies that may prohibit charities from directly accepting these complex assets. Further, donors can diversify their giving by making multiple grants with the contribution of only one asset.
- You can enjoy greater flexibility. Unlike private foundations that require annual distributions of at least 5% of the foundation’s net assets, donor-advised funds have no annual distribution requirement. Donors receive an immediate tax deduction and can take their time when making grant recommendations. Additionally, donor-advised funds allow donors to make gifts anonymously.
To make a donation to Holton from a donor-advised fund, consult your financial and legal advisors today!If you have any questions or would like additional information, please contact Alison Wacker, Gift Officer, 301.365.6079.