What is a Donor Advised Fund?

A Donor Advised Fund is a family foundation alternative that provides a simple, flexible, efficient way to manage your charitable giving. You and your family can enjoy immediate and maximum tax advantages, make grants on a flexible time table, build your charitable legacy, and increase your philanthropic funds for future grant making.

Naming the Fund:

Most donors name their Donor Advised Fund after themselves or family members, for example: The John and Jennifer Smith Fund, or The Jones Family Charitable Fund. Others name their Funds for a purpose, such as: The Hometown Children’s Health Fund.

Statement of Fund Purpose:

In order to communicate expectations and goals to future Successor Advisors (if applicable), donors are encouraged to provide a Statement of Purpose for their Donor Advised Fund, for example: “It is our intention that the John and Jennifer Smith Fund be used to support various charitable organizations in Cedar Grove, New Jersey.”

Donor Benefits:

Immediate and maximum tax benefits Because AEF is a public charity, contributions immediately qualify for maximum tax benefits. You can then recommend grants to charities across the nation on your own flexible timetable.
Tax free growth (which means more dollars for charitable purposes) Investments in your Donor Advised Fund grow tax free to support more giving in the future. The AEF Donor Advised Fund lets you structure your giving over time, enabling you to leverage the impact of your grants to worthwhile causes.
Privacy Charitable giving can be quite personal. You may want buffer between yourself and grant-seekers. Donor Advised Funds enable you to select recognition or privacy as desired, (i.e., privacy in contributing assets, privacy in grant-making and even anonymous grant-making.)

Simple and effective Fund management With a Donor Advised Fund, you can eliminate the year end pressures, such as scrambling for a place to make a tax-deductible donation or hunting through files for charitable donation receipts. You can research charities online, recommend grants online, track giving over time, and consolidate your tax reporting.

Creation of a lasting legacy of giving You can start small and build over time or maximize your initial contribution. Currently, Donor Advised Funds can range from $10,000 to $10 million. Donors typically establish a Donor Advised Fund to act as a multigenerational family fund for their charitable giving. For example: you can personalize the account with a family name (e.g., “The Smith Family Fund”), involve family members in recommending grants, and name successor advisors. It allows you to mentor successor advisors and monitor the wisdom successor advisors garner in the management of the fund.

Tax Benefits:

Save taxes in four ways
1) Contributions are tax deductible in the year they are made. Because Donor Advised Funds are public charities, contributions qualify for immediate and maximum tax benefits.
Deduction for cash: Up to 50% of adjusted gross income (AGI). Deduction for securities and other appreciated assets: Up to 30% of AGI. Five year carry forward of unused deductions. 

 2) Avoid capital gains on gifts of appreciated property.
3) Reduce or eliminate estate taxes.
4) Investments in a Donor Advised Fund can grow tax free.

What to Give

AEF can accept and hold a wide array of assets. Below you'll find a brief overview of some of the most common types of assets that you can donate to an AEF Donor Advised Fund.

Checks, Publicly traded securities,  Closely held stock,  C-Corp,  S-Corp,   Life insurance,  Real estate,  IRA assets While most donors choose to make contributions by check or by contributing publicly traded securities, some donors make gifts from more complex assets. Donor Advised Funds can accept and hold a wide array of assets. As always, you should consult with your legal, tax, and financial advisor(s) prior to making a contribution.