Donor advised funds, also called charitable gift funds, have been around for a long time, but they have historically been used on a limited basis.
That’s changing, however.
Many folks, including brothers Gary, Pat and Bob Myers of Seymour, find that a donor advised fund simplifies their charitable donations, giving them better control of their money and a simplified deduction for their taxes.
The brothers established a donor advised fund that honors their parents, Francis “Pat” and Dorothy M. Myers, and the family’s dedication to helping the communities that supported the family business, Kocolene Marketing. It’s the second-oldest fund at the foundation, both of which were established in 1992.
“Kocolene receives many requests for charitable donations each year from within our local county but also outside since we market in three states,” Gary Myers said. “The guidelines established by the Community Foundation help us screen the requests and ensures the true worthy causes gain the strongest consideration. The donor advised program is very flexible in that we can request grants be made from the fund to any qualifying charitable organization be they local or outside the county.”
Grants from the fund have benefited countless organizations over the years, including the Seymour Area Youth Football League, Jackson County Community Theatre and Seymour Main Street.
Giving to others was something instilled in the Myers brothers from childhood.
“My brothers and I were always raised by both our father and our mother to share our blessings and help in ways one can to make the community better,” Gary said. “If we want a quality of life, we cannot sit on the sidelines and hope someone else does all the work. We each need to pitch in and share our individual gifts and talents to make our community a great place to live, work and raise a family. Getting involved in some way is also rewarding personally. I’ve gained many friends and have such good memories from my days serving on local and state boards or committees.”
When compared to a private foundation, a donor advised fund administered through the foundation offers simplicity.
Consider these facts:
No legal or accounting fees are needed to establish the fund, although it’s always good to have a legal or financial adviser go over any proposed fund agreement.
The fund is not required to file an IRS 990-PF as private foundations must do.
Funds do not pay the 2 percent excise tax required of private foundations.
No required distributions. Private foundations must distribute at least 5 percent of assets each year.
One gift can support many charities. It all depends upon the fund adviser’s wishes in a particular year.
Because the foundation is a public charity, donations may be deductible up to 50 percent of AGI rather than the limit of 30 percent for a private foundation.
Minimal cost and no recurring fees beyond an annual management fee.
Better timing and control of your charitable giving.
Gifts may be cash, mutual funds, bonds or securities that may avoid capital gains and increase the value of the gift.
At any time your fund may be used to establish another endowed fund at the foundation, such as an administrative endowment that could benefit the future of the foundation.
Establishing a donor advised fund is simple.
An initial irrevocable gift of at least $5,000 to the foundation can establish a fund.
You name the fund and designate an adviser, which can be you or someone else you designate. This can be a great way to teach philanthropy to your children, involving them in the selection process and reviewing the impact of gifts and earnings.
The adviser makes recommendations regarding grants. All grant recipients must be valid charities, and foundation staff will do the research and confirm this before grant checks are written. This preserves the charitable nature of the fund.
You may add to the fund at any time. Ideally the fund will continue to grow with earnings from investments.
To learn more about establishing a donor advised fund and how they operate, give me a call at the foundation office, 812-523-4483. And keep in mind there are other types of funds that might better suit your giving goals, such as unrestricted funds and designated funds.
Dan Davis is president and CEO of the Community Foundation of Jackson County. For information about donating opportunities with the foundation, call 812-523-4483 or send an email to firstname.lastname@example.org.