Here’s Why To Consider A Donor Advised Fund

With the holidays and Thanksgiving around the corner, it’s a great time to discuss giving back to those in need. At Sherman Wealth, we are very charitably inclined, so we want to discuss how setting up a donor advised fund could be a good option for you and your family. For those who don’t know, a donor advised fund is a charitable investment account that you can open for the purpose of supporting organizations and charities of your choice and that you care about.

Donor advised funds allow you to be very creative in making your tax-deductible donation. You can donate cash, stocks, RSU’s, or non-publicly traded assets. Once your money is in your account, you do not have to donate it right away, you can let that money grow within the account, tax free, until you are ready to donate it.

Interestingly enough, we read an article stating that Fidelity Charitable and Schwab Charitable donors gave record amounts of money to support non-profits in 2020, inspired by a desire to help those suffering during the pandemic.

Fidelity Charitable said its donors made 2 million grants totaling $9.1 billion to 170,000 charities in 2020, a 24% increase in the amount of money donated and a 31% increase in the number of grants compared to 2019. According to the company VPs, the pace and the amount of giving stood out compared to previous years. The pandemic changed giving targets, as donors supported organizations that provided food and other necessities for people who experienced economic setbacks due to the outbreak.

For those who have unique tax situations and are also interested in charitable giving, you can contribute funds into a donor advised fund, which will allow a donor to make charitable contributions, receive a tax deduction and then distribute the money over time. It is a great way to benefit your tax situation while also supporting your favorite charities. It was so incredible to see such an outpouring of love and support to those in need during such a difficult time. If you are in a position to do so, we always encourage others to consider giving back to those in need or setting up a donor advised fund. If you have any questions about setting up a donor advised fund or charitable giving, please reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute meeting.