Many brokerage firms, mutual fund companies and community foundations offer donor-advised funds, which allow individuals, families, businesses and agencies to make charitable contributions, get immediate tax benefits, and grant the money over time to nonprofit organizations and areas of interest.
Donor-advised funds are becoming increasingly popular investment vehicles for San Diegans, especially if you want to:
Several factors such as minimum fund requirements, fund fees, community impact and support staff may impact whether you decide to open your fund at a commercial institution or a community foundation.
It’s important to remember, however, that while some commercial institutions may offer lower investment fees, they:
Conversely, community foundations are grantmaking public charities dedicated to improving the lives of people in a defined local geographic area.
Donor-advised funds are powerful philanthropic vehicles because you are able to contribute any asset, such as cash, stock or real estate, to your fund, take an immediate tax deduction in that calendar year, then support your nonprofit, cause and community when you are ready.
To get started with donor-advised funds, you need to pick a charitable sponsor. That starts first with prioritizing the values most important to you in a philanthropic partner. Is it community knowledge? Community impact? Lowest fund fees? Investment performance?
Considering these questions will help guide your research in choosing the right charitable sponsor for you. As you explore commercial institutions and local community foundation partners, dive into website research, historical performance and impact. Most community foundations have Annual Reports that are easily scannable and summarize the most recent year of impact.
While some individuals may be ready to open a donor-advised fund online without assistance, others may want to have phone conversations and face-to-face meetings (online or in person) to get a better sense of their charitable partner.
When you have made your decision, you will need to complete the necessary paperwork to open the fund itself. Then, you can contribute to the fund with either cash or non-cash assets.
For cash, you can write a check or electronically transfer the funds from your personal account(s). For stocks and other appreciated assets, you can donate the assets directly to the fund to avoid capital gains tax altogether. Work directly with your philanthropic partner and financial advisors to arrange the transaction to maximize your tax benefits.
From there, charitable sponsors manage the heavy lifting from an administrative perspective, provide grantmaking opportunities and help you decide on investment strategies that increase the impact of your gift and create sustainable growth. Depending on the type of fund you set up, your assets are invested to maximize your return and strengthen your grantmaking and social good power.
If you’re interested in learning more about donor-advised funds and how to set up one for yourself, our team of experts can help.
On August 9, 2022, we awarded $838,704 in Opening the Outdoors grants to 24 nonprofit organizations that offer equitable access to outdoor spaces in San Diego County.
“San Diego Foundation is proud to once again support its partners committed to increasing community-driven efforts to enhance accessible outdoor space, encourage youth to learn more through hands-on education and create the next generation of environmental stewards in the San Diego region,” said Christiana DeBenedict, SDF Director of Environment Initiatives.
This year’s grantees will help address these inequities and enhance access to the outdoors throughout San Diego County.
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