A donor advised fund is a fund within a community foundation that distributes funds to other non-profits such as the Anne Carlsen Center. You can open one with a written agreement between you and the organization that gives you (or other family members) the right to recommend distributions (i.e., grants) be made from your fund to the Anne Carlsen Center.
You cannot however direct distributions. You have the right only to make recommendations regarding how much, how often and to which non-profits. Most donor advised funds will follow your advice if it is consistent with the fund’s objectives and the selected non-profits are qualified charities.
Once you have created a donor advised fund, you can:
- At any time, make contributions to your fund, which are invested by the sponsoring charitable organization, which then provides a regular accounting to you.
- Recommend that various amounts be distributed to qualified charitable organizations of your choice.
- Receive an income tax charitable deduction for gifts to your donor advised fund. You receive no further tax advantage, however, when grants are made from the fund to other charitable organizations.
Most donor advised funds allow you to start a fund for $5,000 – $10,000, although additional contributions may be less. You should expect that a donor advised fund typically charges a 1 percent annual administration fee. Others charge an annual fee, such as $25, plus a fee for each transaction, such as $5.
Profile of a Giver of this Gift
- You like the idea of a private foundation but prefer to defer the investment and administrative decisions to someone else and to simplify your tax filings.
- You want to take advantage of greater tax benefits for your philanthropy.
- You want to avoid the ongoing expense and management of a private foundation.
Is This Gift Right for You?
For donors who want to stay involved in advising on the use of their gifts, a donor advised fund offers participation without being as restrictive or as expensive to operate as a private foundation.
Benefits of this Gift
- Convenience and timing: You can take a tax deduction now—when you make a gift to the fund—without immediately having to choose the charities you want to support.
- Simplicity: You can support a number of charitable organizations and centralize your giving without having to retain records for separate contributions.
- Expertise: You can take advantage of the staff’s expertise to research which programs you want to support.
- Family philanthropy: Families can build a tradition of giving and teach their children the value of philanthropy by involving them in the decisions about which grants to recommend. Plus, you can name your children as the next generation of fund advisors to carry forward a true legacy of giving.
How to Make this Gift
If you determine that a donor advised fund is the best way for your family to support the Anne Carlsen Center while meeting your financial goals, here are some things to consider and steps to take.
1. Evaluate the charitable organization carefully. When you make a gift to a donor advised fund, your gift is irrevocable. Make sure the donor advised fund you select is one that supports your values.
2. Understand the fund’s policies and procedures. Minimum contributions, as well as the amount and frequency of grant recommendations, all vary depending on the sponsoring organization.
3. Consider costs and investment. All donor advised funds charge administrative fees that can vary considerably. In addition, investment performance will vary from one donor advised fund to the next, affecting the amount that will actually be distributable to charitable organizations.
For More Information
We understand these gifts are complicated, that’s why we would be happy to work with you and your advisors to discuss a potential gift that meets your financial goals while also supporting our mission. You are not alone in making these life-impacting decisions. Please contact the Anne Carlsen Center Foundation at 1-800-568-5175 to help you answer any questions you may have or to futher discuss your giving options.
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.
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