Donor-Advised Funds
Donor-advised funds (DAF) are “giving accounts”. A donor may be able to itemize and thus take a tax deduction by making a larger gift to a donor advised fund in one year, from which annual gifts can be made over several years. Most brokerages like Schwab, Fidelity, BNY Mellon, and Vanguard as well as non-profits like The Seattle, Skagit, and Bellingham Community Foundations offer donor-advised funds. Each has different minimum contributions and fees. Donor-advised funds can be funded through gifts of cash or securities. Contributing appreciated securities provides added tax savings as there are no taxes on the capital gains. The money you give is directed over the course of several grants to the charities you recommend. The board has the ultimate authority to either accept or reject the recommendation. In practice, the governing body of a DAF rarely rejects a donor’s grant recommendation, but some donors prefer to retrain full discretion over how their funds are dispersed. In this case, they could consider a Private Foundation.
Private Foundation
A private foundation is a distinct legal entity. An old chestnut is that you need assets of $5 million or more to justify the expenses associated with managing a private foundation. In fact, nearly 70% of private foundations have assets under $1 million. Many brokerages and banks can help set up a foundation. Because a private foundation can always be converted into a DAF but not vice-versa (fund sponsors typically have rules against gifting assets to a private foundation), choosing a private foundation leaves this door open.
**Please let us know if you have initiated this process so we can direct the donation per your wishes when it arrives.
If more information or assistance is needed, please call our office, 360-428-7878 x202 or email info@skagitlandtrust.org.
Address: Skagit Land Trust, 1020 S 3rd Street, PO Box 1017, Mount Vernon, WA 98273
EIN # for Skagit Land Trust: 91-1533402