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Sumina gave birth six days after being forced to evacuate her home when floodwater swept through Muzzafargarh, Pakistan. Save the Children is currently responding to the emergency in Pakistan. Photo credit: Jason Tanner
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Donor-advised funds are rapidly becoming an important way to democratize philanthropy by aggregating donors and facilitating charitable transactions that keep costs down, resulting in lower fees and lower account minimums. For US-based philanthropists, donor-advised funds are one of the most efficient charitable estate planning tools available to anyone looking to create a legacy of charitable giving that can last for many generations. Read further to discover if a donor-advised fund is the best charitable-giving option for you and your family.
What is a Donor-Advised Fund?
A donor-advised fund (DAF) is a private fund administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, family or individual. DAFs allow donors to give cash, stock and other assets where the donor receives an immediate tax deduction when the contribution is made, but can grant specified amounts to the charities of their choice at a later time.
What Are the Advantages of Donor-Advised Funds?
Donor-advised funds provide a number of benefits that direct donations to a charity may not, including:
Ability to accept and process appreciated securities where the donor does not have to pay capital gains tax
Immediate federal income tax deduction for the full market value of your gift
Variety of investment options allowing the contribution to potentially grow over time
Capacity of a legacy versus providing a onetime gift
Separation of tax planning and charitable giving, donor receives tax deduction when contribution is made, but grants to charities can be made later
Simplicity; a single contribution can benefit multiple charities while only requiring one tax substantiation letter
No start-up costs; fund can be established immediately with minimums as low as $5,000
Few administrative responsibilities; fund sponsors handle the account administration and record keeping with low annual fees
Flexibility; you recommend when and how much to give to multiple qualified charities of your choice
Privacy; names of individual donors can be confidential if desired, and grants can be made anonymously
What Can Donor-Advised Funds Do for Save the Children?
DAFs provide an easy, flexible, low-cost method of giving which supports our work for children worldwide. These gifts have been essential parts of the lasting changes we make in the lives of children in need through our various programs and campaigns.
For example, you can also establish planned giving beneficiary designations for giving as part of your estate planning and legacy philanthropy.
Donor-Advised Funds in the News
Fidelity Charitable
http://www.fidelitycharitable.org/giving-strategies/give/making-transition-from-private-foundation.shtml
Fidelity Charitable
http://www.fidelitycharitable.org/giving-strategies/family-philanthropy/growing-family-philanthropy-tree.shtml
Wall Street Journal
http://online.wsj.com/article/SB124036165997141685.html
Investment News
http://www.investmentnews.com/article/20110717/REG/307179986
The Community Foundation
http://www.cfsww.org/whatweoffer/charitablefunds/lampe.html
Contact Information
To learn more about making a gift to Save the Children using a donor advised fund, please contact Sam Connor, Director, Philanthropic Services: 203.341.8202.
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