For many of us, Thanksgiving traditions revolve around roast turkey, pumpkin pie and football. But when holiday festivities like these fall short of providing personal fulfillment, how can you fill the void?
Charitable giving to the rescue. At the Thanksgiving holiday, many of us reflect on giving and gratitude, and how we can share our time, talent, and money. Charitable giving wields a lot of power in that effort. It can further the goals of causes that are near and dear to our hearts, offer a legacy for our loved ones, and/or create numerous tax advantages for investors. Giving feels good, and sharing wealth during our lifetime allows us to see the benefits of our contributions.
Americans tend to be charitable folks. According to a 2016 study by Public Opinion Research, U.S. residents out-donate Britain and Canada by two to one, and we out-donate Italy and Germany by a staggering twenty to one. Research from Giving USA found that U.S. families and individuals give an average of more than $1 billion to charity each and every day—a significant force for addressing important community needs and championing our favorite causes. And, while the contributions we make are for the greater good, savvy investors understand that charitable contributions can also be a smart investment.
Is a donor advised fund (DAF) right for you? If you’re in the financial position to make charitable gifts now and into the foreseeable future, you may want to consider the many advantages of a DAF. This versatile estate, legacy and tax planning tool offers significant philanthropic and tax management benefits. Functioning much like a personal foundation, you can donate a wide variety of assets to your donor advised fund.
Here are some of the many reasons these philanthropic vehicles are surging in popularity:
- While you're deciding which charities to support, your donation can potentially grow based on your investment preferences, making even more money available for charitable donation.
- You can divvy up your charitable distributions however you prefer, whether it’s to one qualifying charity or to a number of them.
- The year you give funds to your DAF is when you get the tax deduction, not the year you disburse to a charity, so you receive immediate tax advantages.
- Unlike cumbersome and expensive private foundations, DAFs are easy to administer. You can also choose whatever name you like for your fund.
- DAFs allow owners to delegate part of their giving to other family members, should you choose to do so.
- They offer the additional attraction of enabling you to include family and friends in your philanthropic process.
Donor advised funds are a useful tax planning and charitable giving vehicle, particularly for taxpayers who are in a high-income tax bracket and regularly give to charities. Under the new tax law, they have become even more useful. They provide the flexibility to make charitable contributions at your convenience while allowing you to bunch the tax deductions from those contributions into a single year.
In this season of giving, it’s still important to screen your charities carefully.
There’s no shortage of financial scandals involving charitable foundations. Remaining vigilant and fully vetting the organizations to which you’re considering donating is a must. Fortunately, there are plenty of tools available to help you identify reputable charities. Some of the best ones include:
- Charity Navigator: Features an easy to use search tool and objective ratings of nearly ten thousand charities worldwide
- Charity Watch: A reputable independent watchdog organization that seeks to protect donor interests by providing detailed information about how charitable organizations are using their donated funds
- GuideStar: The world’s largest source of information on non-profit organizations. Users can see the tax returns of thousands of charities, as well as executive compensation, board information, and more.
Why not extend your giving beyond the financial?
Offering your time and talent to non-profit and religious organizations can be invaluable. Volunteering is also an excellent way to get your whole family involved in supporting the causes that resonate with you the most. From serving hot meals to the needy at a soup kitchen to organizing a food drive or working at the local animal shelter, there’s an endless list of worthy organizations that could use your support.
Since 1987, FAI Wealth Management has been helping donors to accomplish their philanthropic goals in the smartest ways. If you’re seeking to create a giving plan that meets your needs and reflects your vision, our knowledgeable advisors can help. Please contact us to learn more.
About FAI Wealth Management, Inc.: Located in Columbia, Maryland, FAI focuses on helping clients create the financial future they desire by protecting their wealth, making the most of their assets, and planning for life's uncertainties. The firm combines fee-only, fiduciary-driven guidance with highly personalized, consultative financial planning and investment services that enable individuals, families, and businesses to navigate complex life transitions. Founded in 1987, FAI currently manages more than $350 million in client assets nationwide. For more information about FAI Wealth Management, please visit the website at https://www.faiwealth.com or call 410.715.9200.