Donor-Advised Funds ( DAFs) – Doing good while saving taxes

Donor-Advised Funds (DAFs) are getting popular these days. A DAF is a smart and hassle-free way to manage your charitable giving while getting the most bang for your buck. Think of it as your personal charitable savings account. You make contributions to your DAF, snag an immediate tax deduction, and then recommend grants to your favorite charities whenever you like. It’s like having your own mini-foundation without all the red tape. Plus, the funds can be invested and grow tax-free, so you might end up with even more to give in the future. Talk about a win-win!

Now, let’s chat about taxes. When you contribute cash, stocks, or other assets to your DAF, you get an immediate tax deduction. Even better, if you donate appreciated assets, you can avoid capital gains taxes, which means more of your money goes to the causes you love. Think about those significantly appreciated employer stocks that you want to sell and enjoy the profits, but a big capital gain tax bill makes you feel tied up. You can gift them to your DAF, save on taxes due otherwise, and invest for even more growth before you decide to donate from the DAF account to a charity of your choice. It’s an efficient way to handle your charitable donations and make a bigger impact.