What’s up with Donor-Advised funds?

Travis Smith—Travis Smith, CFRE
Director of Development and Gift Planning

For nearly 90 years, charitably-minded individuals and families have established donor-advised funds to help carry out their philanthropic wishes. Popularity of the donor-advised fund steadily grew, especially in the 1990s, eventually resulting in official recognition in the Internal Revenue Code under 2006 tax law updates. Today, over one million donor-advised fund accounts hold nearly $160 billion in charitable assets, according to the latest numbers.

As you talk with your clients about options for their charitable giving plans, please reach out. We would be happy to share perspectives and ideas that consider current trends and legislative developments.

To that end, you and your clients may find it helpful to review the types of funds available through CICF, including donor-advised funds and much more.

The growth of the donor-advised fund as a useful charitable giving tool has made this vehicle something of a celebrity. You and your clients no doubt have begun to see articles about donor-advised funds pop up in mainstream financial publications, as well as in academic journals. And yes! We read those articles, too! A top priority for our team is keeping up with proposed legislation and commentary about charitable giving, including particular vehicles such as donor-advised funds.

First, as you’re likely aware, a donor-advised fund enables a client to establish a specific account for charitable giving. Your client makes a tax-deductible contribution of cash or other assets to the fund, then recommends grants to favorite charities during the current and future years depending on the client’s goals and plans.

Second, CICF has its finger on the pulse of the community’s most pressing issues. An unrestricted fund provides your client with an opportunity to support community needs that cannot be identified until the future. One of the most significant benefits of a community foundation is its perpetual structure that allows the support of not-for-profits to evolve as priorities in the region shift.

Third, to target charitable giving to specific areas of community need (such as education, health, environment, or the arts), your client can set up a field of interest fund to establish parameters for grantmaking under the ongoing guidance and expertise of the community foundation’s staff. Plus, field-of-interest funds can be a wonderful alternative to a scholarship fund and accomplish a client’s charitable goals even more efficiently and effectively.

Fourth, a donor-designated fund allows a client to focus charitable giving on a specific agency or purpose. Over time, CICF’s staff manages the distributions from the fund according to the terms the client establishes.

If you have questions, or would like more information, please contact Travis Smith, director of development and gift planning at TravisS@cicf.org.

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