The Gift of Charity - A Guide to Donor Advised Funds

people planting new trees

By Hatem Dhiab

The spirit of giving back is the very essence of a successful life. Many of those you admire will say that true success begins the moment you start giving back and not a moment sooner. The reality is that charity gives us a purpose-driven life and is the ultimate symbol of gratitude for our blessings. Apart from the beauty of helping others, philanthropy allows us to feel fulfilled and achieve a higher-self.

While many will wait a lifetime before they consider donating, the rewards of being charitable throughout your life are countless. Donor advised funds are a tool that can help us achieve our altruistic goals while taking advantage of tax benefits and giving us ultimate financial flexibility.

A donor advised fund allows for the contribution of appreciated assets (such as stocks or funds) or cash when the time is right, resulting in a tax deduction while keeping those assets invested. This allows you to direct funds to your preferred charities when you feel it is best. It is designed to make charitable giving easy, flexible and efficient.

Here are some of the advantages:

1. Tax Advantage: You are able to give long term appreciated assets such as stocks and, in return, receive a deduction for the full value at the time of gifting. This will help avoid paying any capital gains on these assets. Some charitable organizations will even accept Bitcoin contributions. You can also do this with private stock, real estate or partnership interest.

2. Flexibility: Rather than donating to charities directly, by using a donor advised fund you have the flexibility to make the donation out to the fund so you can better manage which charities you will be supporting. Assets within the fund can also stay invested which allows for further growth. This gives you the time to vet and better plan your donations.

3. Legacy Planning: Using donor advised funds allows you to designate other family members and relatives to make grants, enabling the account owners to share their value of philanthropy with future generations.

4. Simplicity: Foundations still have the lion share of charitable donations, however they tend to be complicated to form and administer. Donor advised funds accomplish similar goals with a fraction of the cost and ease of management.

It is our responsibility to take that first step. It is up to us to offer a helping hand to those struggling to climb the ladder. When we elevate one, we elevate all; that is the true spirit of giving. Only then can we begin to transform the world. It is only then that the better world we dream of becomes a reality.

Securities offered through LPL Financial, Member FINRA/SIPC.

Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor and separate entity from LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

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