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September 19, 2013 ● Facilitator: Clyde W. Kunz, CFRE are.

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Presentation on theme: "September 19, 2013 ● Facilitator: Clyde W. Kunz, CFRE are."— Presentation transcript:

1 September 19, 2013 ● Facilitator: Clyde W. Kunz, CFRE are

2  Definition & History  Advantages of DAFs Compared to: ◦ Direct Giving to Charities ◦ Private Foundations or Supporting Organizations  Regulations Controlling DAFs  Issues to Consider  National & Local DAF Administrators Clyde Kunz & Associates LLC

3  Charitable giving vehicle  Administered by a public charity  Established by an organization, family or individual  A gift to the administrating public charity  Used to make contributions to other charitable organizations (through recommendation process) Clyde Kunz & Associates LLC

4  First established in 1931 by New York Community Foundation  Now offered by commercial sponsors, educational institutions, and independent charities  The fastest-growing charitable giving vehicle in the U.S.  More than 175,000 DAFs, holding more than $37 billion! Clyde Kunz & Associates LLC

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6  Donation of asset(s) to an administering public charity ◦ Tax deduction in year donation is made ◦ Administering public charity invests funds and provides statements  Donor makes recommendations of distribution to administering public charity ◦ Administering charity generally follows recommendations (but doesn’t have to!) Clyde Kunz & Associates LLC

7  Individuals with a need for a significant charitable tax deduction in a given year  Individuals or families who may wish to minimize how many solicitations they receive by “hiding” their giving through an administrator  Those who may wish to align their giving with the values/giving of the administering organization  Those making numerous charitable gifts Clyde Kunz & Associates LLC

8  Regulated by the IRS, including the Pension Protection Act of 2006: ◦ Provides legal definition ◦ List of prohibited payments to donors & advisors ◦ Specifies what grants can be made, and what kind of documentation is needed for DAF contributions  Established with donations of appreciated securities or other assets at full market value, avoiding capital gains taxes Clyde Kunz & Associates LLC

9 Donor Advised FundDirect Gift to Charity  Administrator has experience with DAFs  Can make multiple donations with one securities trade  Tax-deduction is taken up- front; giving can be over several years if the donor wishes  Some DAFs may allow gifts to foreign charities  Costs involved in establishing or administering a DAF  Charity may not be set up to accept securities  If giving to multiple charities, involves several transactions  Must take tax deduction for gifts in the year in which gifts are made.  Gifts to foreign charities may not be allowed  No costs involved in making gifts Clyde Kunz & Associates LLC

10 Donor Advised FundPrivate Foundation  Donor discretion  No new legal entity  Overseen by administrator’s board  Investments controlled by administrating agency  More advantageous limits on deductibility of contributions  No excise tax  Quarterly estimated taxes not required  990-PF is public record  New legal entity is established  Board of directors must be established  Donor retains control of investment decisions  More restrictive limits on deductibility of contributions  Excise tax up to 2%  Quarterly estimated taxes required Clyde Kunz & Associates LLC

11 Donor Advised FundPrivate Foundation  No legal requirement for annual distributions  Distributions: donor makes recommendations  No IRS filing requirement  No legal fees to establish  Administrator provides tax reporting under its umbrella  Management fees 1%-2.5%  Minimum contribution amounts vary, may be as low as $2,500  5% qualifying distributions based on FMV of assets  Donor (within board & regulatory parameters) controls distributions  Must file 990-PF  Legal fees to start up foundation  Tax reporting provided by accountant or service provider  Service provider assesses fees  No statutory minimum, but usually $1million+ Clyde Kunz & Associates LLC

12  Donors need to realize that DAF no longer belongs to them ◦ Administering charity usually follows, but does not have to follow donor’s specific recommendations  DAF grants cannot be used to pay existing or future pledges to charity  Recipient charities cannot provide benefits to donors for DAF grants received ◦ No “tables” or “tickets” to events ◦ No “donor club” benefits of any kind Clyde Kunz & Associates LLC

13 Thank You! Clyde W. Kunz, CFRE ● (520) 977-4019 ● Kunz@Cox.net www.ClydeKunz.com (“Resources” page for copy of PowerPoint presentation)


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