Tracy Craig, Chair of our Trusts and Estates Practice Group, recently contributed an informative article to Kiplinger, focused on individuals interested in including charitable giving in their estate plans. This giving can take many forms. Oftentimes, a donor-advised fund can provide a very cost effective and easy way to give to charities, either during life or at death.
What is a donor-advised fund?
A donor-advised fund (DAF) is an account established with a Section 501(c)(3) charitable organization, known as a “sponsoring organization,” with the purpose of supporting charitable organizations over time. An individual, family or organization can contribute cash, securities, real estate or other assets to a DAF. The contribution to the DAF is considered a gift to charity for tax purposes.
Once the contribution has been made, the sponsoring organization has legal control over the assets, but the donor retains advisory privileges regarding how funds are distributed and how the assets are invested.
How does a DAF work?
Donors can contribute to the DAF as frequently as they like and then recommend grants to their favorite charities whenever it makes sense for them, although some sponsoring organizations may require a minimum contribution and/or a minimum annual grant amount.