Tis the season for phone calls from charities, Santas at the grocery store, and solicitors at the door. None of these things are inherently bad, but are they the best way to donate your money? Just like anything else with your finances, the more intentional you are, the better.
Is there a magical way for you to maximize your generosity?
Enter Donor-Advised Funds
A lot of financial products are as confusing as hell, so don’t go Googling “donor-advised funds.” Instead, here’s what you need to know about how a donor-advised fund–or DAF for short–work, without all the confusing jargon that normally swirls around anything financial:
- Donate cash or other assets to a DAF sponsoring organization
- Choose your investments.
- Decide when and how your money gets to the charities of your choice
- Reap the tax benefits and maximize your donation. If invested wisely, your generous gift will build wealth and keep on giving!
The Devil Is In The Details
Okay, not really the devil, but there are some details to mull over before deciding if a DAF fits your charitable giving goals.
You can give anything from cash (of course) to real estate to life insurance and stocks and bonds. Now, once the money is out of your hands, you don’t have legal control over it. BUT, you are the decision-maker when it comes to how the funds are invested and when they are distributed to the charities you recommend.
Notice I said recommend, not choose. According to the legal setup of these accounts, the organization that holds your DAF isn’t required to follow your “advice” but there’s an understanding that they will.