In our monthly column from Karen Minogue, Waccamaw Wisdom, we’ll unpack the latest in philanthropy and offer tips to make your giving more effective. Topic suggestions welcome at firstname.lastname@example.org.
Sophisticated. Savvy. Accountable. These are some of the words donors use to describe their giving through a donor-advised fund (DAF) at Waccamaw Community Foundation.
When you set up a DAF, you relinquish the assets you contribute, get an immediate tax break and have the privilege of recommending grants out of your fund to your favorite charitable causes at your leisure. It’s like having a private foundation within the Waccamaw Community Foundation without all the time and expense required to set up and maintain a private foundation.
One main draw is the tax advantage of separating your tax planning (when you can use the tax deduction for making the initial charitable gift to the fund) from your grantmaking (there are no required amounts you are required to grant out like with a private foundation). Your fund grows tax-free, so you can give even more to the causes you care about.
At Waccamaw Community Foundation, you can set up a donor-advised fund starting with $10,000, and the minimum grant amount is $200. We recommend you consider endowing your fund, establishing your fund with a minimum of $25,000 and trying to adhere to a grant distribution rate of no more than 4 percent each year. Following these steps will grow your fund and give more over time, and in perpetuity, to the causes you care about.
A donor-advised fund is also a great way to consolidate your grantmaking. Here are some ideas.
Create in memorium gifts. One creative giving idea is for a widow or widower to establish a memorial fund in honor of his or her late spouse. Grants can be made to causes that either spouse values or valued during their lifetime. In some cases, trustees of estates may, as part of an estate plan, create a legacy memorial fund in honor of the deceased.
Accept gifts from family and friends. If the minimum gift size is an issue, family or friends can make gifts to the fund. Any fund at Waccamaw Community Foundation may accept gifts of any size at any time from family members, the business community, or the public.
Set yourself up for a designated fund down the line. More and more donors are interested in creating a legacy for specific charities they support that might not be able to absorb a large gift all at once. They name specific charities and choose a dollar amount or percentage amount that should be distributed from the fund each year. While this type of fund is a designated fund, many donor-advisors elect for their DAF to become a designated fund after their passing.
Get your kids involved. If you have adult children, you can name them as successor advisors on your fund to continue giving as a family.
Give year-round. Charities need donations year around, but the majority of donations come in at year-end. You can use your DAF to make your contributions at the end of the year, but space out your donations throughout the following year.
Collaborate with other donors. DAF donors can pool their resources together easily to make a bigger impact. One new trend is for individual donors to form a “giving circle” of like-minded friends or colleagues who pool their assets to establish a DAF for a geographic area, and then meet to recommend grants. The combined funding could kick start a new project or noticeably influence a specific cause, which in turn may bring the group broader recognition in the community.
We are your first resource for all things charitable. Please give Karen Minogue at call at 843-357-4483 or e-mail her at email@example.com. We are poised to help you set up a fund in as little as one day, but just remember that calendar year-end is quickly approaching if you would like to make a gift or receive a tax deduction for 2016!
Other helpful hints for year-end giving:
• Year-end gifts to Waccamaw Community Foundation should be postmarked by December 31st.
• For gifts of appreciated stock and mutual funds, please allow at least one week for the transaction. The gift date is the date we receive the asset, not the date you instruct your broker to make the transfer. Kindly notify us so we can be on the lookout for your gift.