Insights for Investors: Should You Consider a Donor Advised Fund for Your Charitable Giving?


Maurice StouseBy Maurice Stouse, Financial Advisor and Branch Manager

America and Americans are the most generous on earth. Up until a few years ago, gifts to charities (churches, medical organizations, schools) could be deducted from income at tax filing time. The tax laws changed and many of the tax deductions went down or away with tax reform in 2017. Despite that, Americans continue to donate their hard-earned money and assets to their churches, schools, civic organizations, hospitals and other non-profits. What many folks might not realize is that years ago (over 30 years ago), giving became more convenient and efficient with the innovation or advent of donor advised funds (or DAFs for short). A charitable or nonprofit organization is also known as 501(c)3. Anyone donating to a cause should always confirm that the organization to which they want to give is registered as such. DAFs are also 501(c)3 organizations.

It is suggested that would be donors do a little research upon considering a gift or donation to a charitable organization. A DAF could help simplify that for them. On their own, granters to charity could turn to several sources available online. There are several known choices such as, or These sites can give you an assessment as well as commentary, if that is available. They even rate or score the organization. Many charitably inclined individuals could benefit from the additional knowledge that can be obtained. Often the DAF will assist the donor when they want to gift out of their fund and have the research available on an organization of choice available to them before they donate.

So, what are ways to give? The straightest is by cash, check, securities (such as stock) or some other asset. Real estate (land or homes or buildings) as well as art and perhaps even businesses. While most people write a check (to their church, for example) or have it auto drafted or even put on a credit card, there are other things/ways for them to consider, which is why we are covering donor advised funds.

Many charitable organizations, and most investment firms, set these up for the ease of giving and the simplicity of administration over time, of their gifts. Donor advised funds are in and of themselves 501(c)3 organizations — public charities. So, once a contribution is made, that is the gift. What is flexible is when the money moves to a church, or school, hospital or other non-profit, from the donor advised fund. That could be done now or in years to come, allowing the gift to potentially grow because it is invested. While the money is in the DAF, it is often invested into mutual funds. The objective and hope are that it grows over time and that can lead to even greater gifts to future charities. The key is to realize that by making the donation now, the gift is made, in this tax year, regardless of when the funds move to a non-profit or charity.

What about the impact on taxes? It is important to reiterate that the tax law changes in 2017 meant that the standard deduction went up substantially, so that a charitable contribution would have to exceed that deduction limit and the tax filer would have to itemize. Nonetheless, it is important to point out that should someone qualify (gifting exceeds standard deduction of $14,600 for single filers and $29,200 for joint filers), they could potentially have a deduction from income: 60% of the value of total cash gifts for the year and 30% of the value of appreciated securities for the year. Some people who have stocks that have appreciated in value contribute that and are not be impacted with the taxable gains. A donor advised fund might also be a useful tool in estate planning as well should someone be looking for ways to lesson the impact of taxes on their estates when they pass on.

To sum it all up, a donor advised fund allows the contributor to advise where grants or gifts go and can appoint a successor donor advisor or a charity of choice to receive any residual at their passing. Most DAFs also use technology to aid the giver; whereas someone could make grants directly from their smart phone while they are on the go.

To learn more, talk to your advisor or go to

Maurice Stouse is a Financial Advisor and the branch manager of The First Wealth Management/ Raymond James. Main office located at The First Bank, 2000 98 Palms Blvd, Destin, FL 32451. Phone 850.654.8124. Raymond James advisors do not offer tax or legal advice. Please see your tax professionals. Email:
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