Problem: How Can I Leave a Charitable Legacy?
Solution: Create a Donor-Advised Fund Through Fidelity!
Leave Your Charitable Legacy with a Donor-Advised Fund
What is a Donor-Advised Fund?
A Donor-Advised Fund is a philanthropic account that allows individuals to make charitable contributions from your computer, receive immediate tax benefits, and recommend grants to nonprofit organizations over time.
| Funding Minimum: | No minimum. |
| Distribution: | No annual distribution requirement. |
| Legal: | A fund held within a public charity or financial institution. |
| Control: | The donor’s recommendations do not have to be followed by the administrator. |
| Privacy: | Donors can make grants anonymously. |
| Manage: | All administrative duties such as compliance, accounting and oversight, are outsourced to the sponsoring organization. |
| Grants: | Computerized, you control all grants, but may have certain restrictions on types of grants. |
| Legacy: | Primarily focused on immediate grant-making and generally do not establish an endowment. |
What are the Main Benefits?
Immediate Tax Deduction:
- Qualifying contributions are eligible to be claimed as an immediate tax deduction for the fair market value (for long-term gains) of the donated assets.
- Proactively plan when to itemize deductions to maximize the tax benefits from your donations.
Tax-Free Growth:
- Donated funds can be invested and may grow tax-free for a greater long-term impact.
Estate Tax Benefits:
- A Donor-Advised Fund may reduce your estate taxes by removing appreciated assets from your taxable estate.
Tax Strategies:
- Donating appreciated securities directly to a donor-advised fund may allow a donor to avoid recognizing capital gains that could otherwise result from a personal sale of those assets, subject to IRS rules and limitations.
- “Bunching” donations to receive a tax benefit. Maximizing your tax deductions is often achieved by itemizing deductions every 1, 2, or 3 years. Using the standard deduction often fails to realize the tax benefit of charitable contributions.
*Tax treatment depends on individual circumstances and applicable tax law.
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Tax laws and regulations are subject to change. Any tax-related discussion is provided for general educational purposes only and should not be construed as tax advice. The availability and value of any tax benefit depend on a taxpayer’s individual facts and circumstances. Individuals should consult their own qualified tax professional regarding their specific situation.
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