Community Foundation of New Jersey

10 Reasons You Should Consider Donor Advised Funds

July 21, 2015

Brian Kazanchy, RegentAtlantic

As a Wealth Advisor, I work regularly with clients who have a great interest in making donations to charity. Although they could easily write checks to their favorite nonprofits, I usually suggest my clients look into using Donor-Advised Funds (DAFs) instead.

DAFs, if you’re not familiar with them, are typically administered by community foundations like the Community Foundation of New Jersey (CFNJ) or certain financial institutions. When you participate in these funds, you’re able to donate cash or investments and get a tax deduction that same year.

However, unlike direct donations to a charity, you get to choose when you’d like your money to actually flow to your favorite nonprofits—this year, next year, or even decades from now. If you delay the actual disbursal of your donations (what’s known as “recommending grants”), your money or the value of your donated investments remains invested in your DAF as long as you wish, continuing to fluctuate and potential grow on a tax-free basis.

Here are the top 10 reasons I think DAFs are a better way to make charitable gifts:

For more information on whether a DAF would work for you, consult your financial planner or tax professional.

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