The Charitable Firetruck

The Charitable Firetruck

Article posted in Donor Advised Fund on 4 December 2017| comments
audience: National Publication, EzCharitable | last updated: 6 December 2017
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Summary

The donor advised fund is one of the most economically efficient ways to give. Especially at the end of the year. Download the EzCharitable Excel DAF Illustrator to show your clients why.

Last month, Randy Fox wrote an article on the PGDC titled "It's now or Never." Well, we are getting very close to never. But there's one thing you can suggest your clients can do at the end of the year and they take very little time.

I’ve created a downloadable Excel spreadsheet that you can use immediately that will illustrate the donor advised fund (a charitable firetruck).

This spreadsheet illustrates how a donor advised fund might work for your clients over time. The DAF eliminates the sometimes-stressful decision as to which charities they should make their gifts. There’s nothing like a little good advice at the end of the year to cement your relationship with your client.

The DAF is an extremely useful tool. It separates the WHEN from the TO WHOM. The when is many times for income tax purposes, and that’s usually at the end of the year. The DAF allows the clients to decide to give without the stress of the to which charities.

The Charitable Firetruck

I have a friend who is very philanthropic. She told me her checkbook was her “philanthropic firehose!” She just turned on the water when she saw a fire she wanted to extinguish for a charity. I told her that perhaps she wanted to set up a parking lot for the firetruck the hose was attached to. She had a quizzical look on her face.

I explained to her that she could set up a donor advised fund as the parking lot for her firetruck and at any time (for tax purposes) she could just fill up the water tank on the truck. She could then turn on the water by making grants from her DAF (firetruck) any time she saw a fire.

I explained to her that this simply separated two different decisions she needed to make. The first being when to make that charitable gift where it would be the most advantageous from a tax standpoint (thus allowing her to put more water in the tank). The other being when the fire started, which in many cases is an unknown! This eliminates stress and possible mistakes as to where she made her gifts without time for any due diligence to see if there was really a fire.

The holidays are not a time when you want to be pressed with additional decisions when your advisor suggests you may want to make your charitable gifts before January 1st to eliminate some unwanted additional income tax.

Perhaps you could suggest a parking lot for your clients this year. They are simple to establish. Just contact your local community foundation. A warning here, the sponsoring charity does need to have time to decide whether they want to receive the gift to the fund or not. That’s why I’m suggesting marketable securities. They’re simple if the brokerage firm has their charitable act together. So, don’t wait until Dec 31st! Mutual funds generally take longer. Consult with the sponsor of the DAF.

DOWNLOAD YOUR FREE CALCULATOR HERE

Let me know if you have any questions or comments below.

Lee Hoffman

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