Tuesday, August 16, 2011

How Donor Advised Funds Can Bless Your Family

Recently Deseret Trust Company adjusted their levels for a donor advised fund (DAF). They are trying to create a vehicle that allows for philanthropy without the expense of setting up a family foundation. Below are the details on these tools.

First I wanted to share a couple reason why I like these so much. As a family you can pool money into one spot with tremendous tax advantage and the benefits of interest. Further, you can then form a type of "board" of your choosing to decide how that money is given away (with some exceptions, see below). This pattern can go on in perpetuity. I have seen families put their kids as board members. Each year they hold a family council and decide where the funds should be given. The Spirit is strong as families come together in unity to give money to those in need. Even if a family member was not able to contribute much that year to the fund they can still be full participants in the family's philanthropic decision.

Grandparents can not only teach philanthropy to their grand kids with this tool but once they have passed away their legacy of generosity can continue much like a charitable foundation just without the expense and administrative challenges. 

Online Donor Advised Funds

Deseret Trust Donor Advised Funds online program is a simple, powerful, and highly personal approach to giving. You may want to assist The Church of Jesus Christ of Latter-day Saints or the Church schools, provide for missions, give back to the community, share and perpetuate philanthropic values with your children or grandchildren, or create a highly organized center for all your gifting activities. A donor advised fund provides all of this and more so you can focus your time and energy on giving.

Now you can create a fund online through the services of Deseret Trust Company, owned and operated by the Church. Click here to setup a Donor Advised Fund.

A donor advised fund is a convenient way for philanthropically minded individuals to simplify their charitable giving and take advantage of tax savings. Donors make an irrevocable contribution to the Deseret Trust Company to establish the fund. Thereafter, the donor can recommend charitable organizations to receive grants, subject to Deseret Trust Company´s Rules and Policies.

Donor advised funds allow donors to:
  • Simplify charitable giving
  • Eliminate capital gains taxes on donated appreciated property
  • Involve donor´s spouse, children or associates in charitable giving
  • Secure the maximum tax benefits immediately for each charitable gift
  • Support the Church and community charities through one simple donation
  • Simplify tax reporting
  • Retain the flexibility of giving varying amounts or to change charities over time
  • Give anonymous grants (optional)
  • Maintain a steady level of giving despite a fluctuating income level
  • Enjoy many of the positive aspects of a private foundation without the accompanying administrative burdens
The typical donor:
  • Desires to assist the Church charities and institutions
  • Wants to time the gift to his or her tax situation
  • Desires to involve his or her family in gift-making decisions
  • Wants to give now, but may not be sure which charities he or she wants to benefit
Gift features and benefits:
  • Gift tax deduction based on full market value
  • Separates timing of gift with distributions to charity
  • Creates philanthropic training ground for the family
  • Allows family involvement after your death
How do I make a gift using a donor advised fund:
A donor advised fund to benefit the Church or its institutions is administered by Deseret Trust Company. You fill out an application, receive approval, then transfer cash or marketable securities to Deseret Trust Company. You and your advisors recommend to Deseret Trust Company those charitable causes that you wish to benefit.

Summary of the online donor advised fund:
Initial Contribution Minimum: $5,000
Minimum Additional Contribution: $500
Total Fees:
Asset Levels: Tier Fees:
First $500,000 0.80%
Next $500,000 0.50% plus prior tier fees
Next $1,000,000 0.30% plus prior tier fees
Over $2,000,000 0.20% plus prior tier fees
Minimum Fee $75
Fees will be prorated and charged on a monthly basis using the average daily balance of the Fund. DTC program fees include administration and investments.
Grant Processing Time: 5th business day of the following month
Minimum Grant Size: $350
Charitable Grant Recipients: Minimum of 40% to Church charities; balance to other charities compatible with Church mission
Grant Source: Principal or Income
Advisory Period: Perpetual
Donor Service: LDS Philanthropies (Assistance, Research and Due Diligence)
Program Administrator: Deseret Trust Company
Click here to view a Comparison of Philanthropic Giving Vehicles.

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