Donor can be in control of funds at foundation
This is the 11th in a series of articles
about the Davie
Community Foundation and its work in the county.
The Davie Community Foundation offers fund options to assist community members with charitable giving.
One of the most popular type of fund, Donor Advised Fund, can provide tax advantages for the donor and can help organize their charitable giving.
The foundation holds 62 different Donor Advised Funds with a value of almost $4 million.
Donor Advised Funds may be opened at the foundation with a gift of $5,000. The fund can be set up in one of two ways:
1. Endowed Fund – a permanent fund that is invested forever with a percent of earnings spent each year.
2. Non-endowed Fund –the entire fund balance is available for grant making.
Once a Donor Advised Fund is opened, the donor becomes a partner with the foundation and can recommend grants to charities at any time. The foundation board has final approval of all grants made from the foundation.
Every year, the donor receives a statement summarizing the gifts made to the fund and the grants made from it. So far this year, Donor Advised Fund holders have recommended more than 130 grants totaling more than $214,000.
Benefits to the donor include:
• The donor receives a tax deduction when they make a gift to the fund. The money in the fund can be used for grant making at any time going forward.
• If the gift to the fund is made with appreciated securities, the donor receives a tax deduction for the fair market value of the stock when it is transferred to the foundation. Since the foundation is the one who sells the stock, the donor avoids Capital Gains Tax.
A simple example: John Donor bought stock 10 years ago for $1,000. John decides to donate the stock to the foundation. At the time the donation is made, the stock is valued at $10,000. John receives a tax deduction for the full $10,000 even though he only paid $1,000 for the stock. John does not pay Capital Gains Tax on the $9,000 gain.
• If a donor is considering using the standard deduction instead of itemizing, they may want to consider bunching their charitable contributions into alternate years. If you make a larger gift in one year and no gift in the next, it will enable you to itemize deductions in one year and take the standard deduction in the next.
• If you do not want to give a large amount of money to charity at one time, you can contribute it to a Donor Advised Fund at the foundation and then recommend grants to charity over time.
• Donor Advised Funds can also be helpful during the sale of a business. The donor should work closely with their advisors to determine the dollar amount they should donate to the Foundation in the year of the sale of the business. The donation may be made in appreciated stock to maximize its effect on taxes. Regardless, the donation will help offset the taxes generated from the sale.
“Our donors have many uses for their Donor Advised Funds but, in all cases, we do our best to provide the personal service they need and appreciate,” said Jane Simpson, foundation president and CEO.
To learn more, contact Simpson at (336) 753-6903 or email@example.com or visit www.daviefoundation.org.