Are you looking for a tax-efficient way to support a charitable cause close to your heart?

A donor-advised fund, or DAF, may be worth considering. A DAF could be part of your end-of-year tax planning strategy.

With DAF, you can contribute cash, stocks and other appreciated assets, receive an immediate tax deduction, if eligible, and recommend grants to your favorite IRS-qualified charities over time. Donating appreciated assets, including stocks, allows you to reduce or eliminate capital gains taxes yet deduct the full fair market value of the assets.

DAFs also offer two additional potential advantages: tax-free growth on assets held in the fund and the ability to avoid capital gains taxes on appreciated investments you donate. This can help maximize the amount ultimately available for charitable giving.

In your estate plan, you can name a DAF as beneficiary of your IRA. This may be appealing to solo agers who have no children to whom they would bequeath assets.

Keep in mind, though, that contributions to a DAF are irrevocable. Investment choices are limited to those offered by the program and fees may apply.

Charitable giving and tax rules can be complex. Consult with your financial advisor and tax professional to determine whether a donor-advised fund fits your goals and overall financial strategy.

About the Author

This content was provided by Edward Jones for use by Cailyn Paradise, your Edward Jones financial advisor at 860-567-4015.  Member SIPC

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