Donor advised funds: family giving made easy

Investing and Retirement Planning

Contrary to the popular perception of Americans as self-centered, we are in fact an incredibly generous nation. In 2019, Americans gave more than $450 billion to charity—with 70% of that amount coming directly from individuals.Disclosure 1

And while much of these donations come in the form of direct cash gifts, more and more individuals are turning to planned giving vehicles as a way to better manage their charity. This is borne out by the fact that there are now 870,000 individuals and families in the U.S. who have established donor-advised fund accounts.Disclosure 2

How donor advised funds work

Donor advised funds (DAFs1) offer a simple, low-cost giving solution with a number of key advantages compared to just writing checks to your favorite charities. Unlike other planned giving options, DAFs don’t require a lot of money to set-up (often accounts can be opened with as little as $2,500). They’re easy to establish, and can be funded with a wide variety of assets including cash, appreciated stock, bonds, mutual funds, real estate and other illiquid assets.

Once your fund account is opened, you then choose from a variety of investment strategies for how your gifted, but not yet granted, assets will be managed (for additional tax-free growth potential). You can then begin recommending grants to any IRS-qualified public charities. And because your contribution to a DAF is considered an irrevocable gift, it’s immediately tax deductible (typically up to 60% of your adjusted gross income for cash contributions and up to 30% of your adjusted gross income for appreciated assets that you donate) while affording you as much time as you want to decide on the charities you wish to support.

Because the public charities that sponsor DAFs handle all the necessary records, disbursements, and tax receipts, you can focus more on giving than on paperwork. You can support as many different charities over the course of a year as you want using your DAF, and you'll only have a single tax receipt you need to keep track of.

Create a legacy of giving

A donor advised fund account can provide a tremendous platform for involving your entire family in selecting and supporting charitable causes they feel passionate about. It can serve as the hub of your family philanthropy, helping awaken a charitable impulse in future generations, and encouraging them to become more empathetic, compassionate, and generous adults.

Gifts can be made anonymously, should you wish to maintain privacy. And from a legacy standpoint, you can name beneficiaries for your DAF—one or more family members to take over and carry-on your charitable efforts, and/or specific favorite charities you want to receive a portion of your remaining donated assets when you die.

While there’s no right or wrong way to give, donor advised funds can help bring more structure, simplicity, and flexibility to your charitable desires than you can achieve through direct giving. 

Wondering if a DAF could be a valuable tool in simplifying your family’s charitable giving?

Contact a Truist Wealth Advisor.

Donor advised funds are offered by Truist Investment Services, Inc. Donations are irrevocable. The Board of Directors of the Fund has ultimate control over all assets. Donors have no right to income or principal and account values will fluctuate. The amount ultimately available for Donor recommended grants may be more or less than Donor contributions. Potential donors should consult their tax advisors.