For years, charitable giving has been one of my personal passions. I currently serve as a board member for and advise numerous private family foundations, and I have served as Chairman of the Board for a local community foundation dedicated to offering charitable giving advice. In my work helping individuals and families optimize their giving strategies, one of the most effective ways I’ve seen to ensure the greatest impact to charitable organizations while also achieving significant tax savings is to gift appreciated stock using a Donor Advised Fund, or DAF. It’s a strategy that does an amazing job at what I call “combining a legacy of dollars with a legacy of values.”
There are five key advantages of this approach:
To understand how this strategy can work in the real world, here’s how we helped one couple use it to combine a legacy of dollars with a legacy of meaningful values to create a small miracle:
Don and Jane* wanted to increase their gifts to City of Hope (which holds a special place in their heart because of the miracle cancer treatments they practice) and a handful of other charities. That dream became very real when they received a major windfall of appreciated stock. A company in which they held over $1,000,000 of shares with a cost basis less than $100,000 was being bought out. Because the tax hit on the transaction would have been significant, contributing a significant amount of their shares to a DAF made perfect sense tax-wise, and it enabled them to reach their gifting goals. We collaborated with their CPA to create the fund, and we worked out a plan for them to save on the capital gains tax, dramatically reduce their current-year tax bill, and stretch out their charitable giving for many years to come.
The holidays are a wonderful time to give—and the perfect time to optimize your gifts from a tax perspective. How fitting that generous giving can offer much-needed support to the people and organizations that need it most and reward the giver both emotionally and financially! To explore how gifting appreciated stock through a DAF can help you, too, give purposefully and reduce your tax bill for the year, contact us today.
* The names and specifics of our clients have been changed to ensure their privacy.
For further information follow this great link and pictorial on how to setup a Charitable Fund: Contributing Appreciated Non-Cash Assets Can Maximize Charitable Impact