What are Donor-Advised funds? Do you need one?

Do you want to create a lasting legacy?

Richard Lewis came into my office looking to find the best way to give $20,000 of an inheritance he had just received to his favor­ite causes. He wanted to maximize his gift and also receive some tax benefits. I helped him set up his very own donor-advised fund that he named “The Lewis Lasting Legacy Account.”

What is a donor-advised fund?

A donor-advised fund offers an easy way for a donor to make sig­nificant charitable gifts over a long period of time. This fund is similar to a private foundation but requires less money, time, legal assistance, and administration to establish and maintain. Because donor-advised funds are public charities, they also enjoy greater tax advantages than private foundations. Cash and appreciated securities can be contributed to a donor-advised fund potentially making use of additional tax benefits. Private businesses and non-publically traded investments may also be eligible depending on the donor advised fund company’s rules and capability. Once funded, the donor-advisor fund consults with a donor about time horizon and risk tolerance to identify an appropriate asset allocation for their donor advised fund.

Is a donor-advised fund right for you?

Before deciding to start a fund you will need to decide:

• How much will your initial contribution to the fund be? Note: many have minimums of $10,000. Additional contributions to a donor advised fund typically can be made at any time and in any amount.
• What would you like to name the fund?
• Will your fund be anonymous?
• How many organizations will receive grants from your donor-advised account, how much and how often?

A few other items to note: A donor advised grant recommendation typically must be for a minimum of $250. There is no maximum amount. A donor advisor may recommend an unlimited number of grants from a donor advised fund.

How do you set up a donor-advised account?

It’s easy to set up an account. The donor first signs a letter of un­derstanding with the administering organization, establishes an ac­count, names the account, and recommends an investment strategy. Then, the donor makes required minimum gifts of assets, which may include cash, real estate, stocks, mutual funds, closely held securities, and, in some instances, private and restricted securities, depending on the donor-advised fund. The required minimum donations vary from organization to organization, but are usually less than those required by private foundations.

Looking for a Christian donor advised fund?

If you are looking for a Christian donor-advised fund, National Christian Foundation is a great resource worth checking out.Founded in 1982 by Larry Burkett, Ron Blue, and Terry Parker, NCF and the nationwide network of Local Christian Foundation (LCF) affiliates have granted more than $1.4 billion to more than fif­teen thousand churches and ministries worldwide. To accomplish this, NCF and the LCFs offer expert counsel and innovative, flexible giving solutions to help:

• Individuals and families make a greater impact with their chari­table giving, give practically any asset entrusted to them, and balance their giving with income needs.
• Churches and ministries offer their supporters creative ways of giving, which can lead to significant new funding for their orga­nization.
• Professional advisors (financial planners, CPAs, attorneys, and oth­ers) present charitable giving expertise to their clients, which turns their practice into a ministry and builds stronger relationships.

NCF is annually among the top ten U.S. foundations in grant dis­tributions and among the top five public foundations in a number of other giving categories. NCF is also a member of the Evangelical Coun­cil for Financial Accountability (ECFA).

Why use a Christian donor-advised fund versus a secular fund like Fidelity?

Not to pick on Fidelity as I used to work there, but the most convincing answer is that all donor-advised funds from any fund family or organization ultimately reserve the right to reject or refuse any charitable contributions to any organizations they deem unfit. What if a secular mutual fund company refuses to allow contributions to Christian ministries or churches because they regard homosexuality as a sin? This is not the case now, but based on recent trends, this may be a likely possibility in the near future.

A Christian donor-advised fund will not face this possibility as their primary focus is to help Christian ministries and organizations. They have a history of fighting for protecting the freedoms of Christians worldwide. Above all: Join the cause and support organizations that mirror your values.