Charitable Giving
From the Orange Couch

Hello! I’m Ashley Albertson, your Client Services Manager at Tull Financial Group. I wanted to welcome you all to our video series entitled From The Orange Couch, where we answer some of your commonly asked questions about your personal finances. Today, joining me is Robin Tull, our resident expert, CEO, and Founder of Tull Financial Group, with over 35 years of experience as a Certified Financial Planner.

Today, we’re going to talk about donor-advised funds. So, the topic is charitable giving, and at the end of the year, our clients are looking to give while also maximizing those tax deductions. Can you explain why this is so beneficial?

0:37
Everybody has that desire to make a charitable gift to their church, their synagogue, or a health care organization. It’s just part of the heart of giving. And so a lot of people come to us, and they say, how can I do that in the most tax-efficient way? The donor-advised fund is a good way to do that.

We actually have several clients that we do help with these. Can you explain to those who don’t know what exactly is a donor-advised fund?

1:04
The best way to look at it is like a savings account. It is held at an institution, like maybe a mutual fund, which is generally held at a Fidelity or a Vanguard or a Schwab, and you make the contribution to the donor-advised fund. You get the immediate tax deduction, and then you make grants when you want to – maybe next year, maybe a couple of years from now.

1:24
Okay. So, it’s like a foundation without the headache of setting up a foundation. Right. Foundations can be— there’s usually a minimum to set them up. There’s the tax cost of setting them up, the filing with the IRS— but the donor-advised fund avoids most of that.

1:40
Good to know. So, I could have the Albertson Family Charitable Fund, and then we could give to places we are passionate about. Right?

1:47
The nice thing about a donor-advised fund is you can name it whatever you want – like the Albertson Legacy Fund. Recently, we’ve had a client who had a daughter who passed, and they named the donor-advised fund after her. And so, when gifts go out from there, it’s in her honor. And it’s been a really nice thing for them in memory of her.

2:09
But you can also do it anonymously as well, right? That is true, Ashley. You know your neighbors come around regularly, and their kids are always raising money for their local school projects, and it’s a way you can make a contribution to a charity anonymously. It means that they don’t necessarily have to come back the following year.

That’s good to know. So, from a nonprofit’s perspective, what is beneficial about receiving these funds from these donor-advised funds?

2:35
It gives you a structural way of giving to that nonprofit. Many of these nonprofit organizations — churches even — have building programs and capital campaigns, and they’re at different times of the year. You might have that Apple stock or that Amazon stock that’s appreciated now, and you want to give it, and the program is not until next year. So, you make the gift of that stock now, you get the tax deduction now, and you avoid the capital gains now. Really nice. And then, when the capital campaign program occurs, you can make that grant from the donor-advised fund. Really tactical in the area of tax planning.

Sounds like a very strategic way to give. It is.

Okay, well, speaking of year-end planning, what is our next topic going to be about?

3:21
The other thing I wanted to name, if I could say, is this bunching idea that we’ve done before. It’s very similar to the other with the Amazon or Apple stock. I’ve seen people who give at the end of the year because you can’t get that charitable deduction with the standard deduction today. So, you could bunch your charitable giving at one time by making that gift to the donor-advised fund. Get the deduction, then. We’ve had people do that when they sell a business or they have a large income inflow. They make that gift to the donor-advised fund, and then they get the tax deduction, and then they make the grants over time.

3:58
So, those are all the things that we look at. I think in the next one we’re going to talk about Roth conversions. We’re going to talk about tax loss harvesting. But this is the time of year when we talk about that.

All good things to think about. So, we will see you all next time at The Orange Couch! Thank you.