Embarking on a journey of charitable giving can be deeply fulfilling, especially when inspired by personal connections and a desire to make a positive impact. As you navigate the realm of giving, consider weaving a strategic approach into your planning – one that spans generations and leaves a lasting legacy of compassion and generosity.
Being strategic in how you contribute to charity is essential, as it not only helps your donations make a more significant impact but can also lower your tax liability on an ongoing basis. Plus, depending on how you do it, you can even create a legacy of gift-giving that continues long after you’re gone.
What Are Donor-Advised Funds (DAFs)?
Establishing a donor-advised fund (DAF) is a pivotal strategy in multi-generational giving. Our team at Paradigm manages these funds through reputable sponsoring organizations like Schwab, simplifying the administrative aspects of giving.
With DAFs, you can contribute various assets, from stocks to cryptocurrencies, and benefit from immediate tax deductions. Our team offers our clients a user-friendly platform allowing easy setup and management of your DAF, giving you control over how your contributions are invested and when grants are distributed to charities. It’s a flexible and efficient way to support causes close to your heart.
Managing and Investing Funds Through Schwab
At Paradigm, we guide you through managing and investing funds within your DAF. We have access to robust investment options that provide opportunities to grow your charitable assets, ensuring a lasting impact on the causes you support.
In general, funds must be distributed from your DAF at least every 18 months, aligning with our commitment to proactive and impactful giving. We work closely with you to strategize grant distributions that align with your philanthropic goals and maximize the benefits for both you and the recipient organizations.
Easy Gifting
One of the advantages of DAFs is the ease of gifting funds. Whether you’re making contributions or recommending grants, our team’s platform streamlines the process, allowing you to focus on the impact of your giving.
Control Over Contributions
Clients at Paradigm have complete control over where their gifts go as long as the recipient is a 501(c)(3) organization. This level of control ensures that your contributions make a meaningful difference to causes that matter most to you.
Like a 401(k), IRA, or other savings account, you can establish recurring payments to the DAF and make one-off contributions.
While cash and cash equivalent contributions are acceptable, DAFs can also be funded with non-cash assets, including:
- Stocks
- Mutual funds
- Bonds
- Life insurance
- Cryptocurrency
Donating appreciated assets (like stocks or property) can help you stretch your donation further. For example, rather than selling the stock, paying the capital gains tax, and donating the remaining amount, you can donate the stock directly to the DAF, bypass the capital gains tax, and allow the asset to continue growing tax-free in the account.
Some charities also need to be set up to receive complex donations (like mutual funds, property, shares in a corporation, etc.). However, they can easily accept grants from a DAF. Putting the assets into the DAF first allows you to donate the intended assets while ensuring the final recipients can accept them.
Enhancing Your Charitable Giving Strategy
Incorporating a multi-generational family charitable giving strategy into your year-round planning benefits the community and enhances personal satisfaction and family connection. Proactively shaping your giving approach and leveraging tools like a Donor Advised Fund can enhance your legacy of compassion and generosity to make a meaningful impact on future generations.
If you’re considering leveling up and honing in your charitable giving strategy with DAFs, don’t hesitate to contact our team at Paradigm. We’re here to help you develop and execute an efficient and strategic giving plan that aligns with your values and goals.