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Download Where will the money go? Leaving a legacy with your estate a fter
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are September 19, 2013 ● Facilitator: Clyde W. Kunz, CFRE 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 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 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 Clyde Kunz & Associates LLC 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 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 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 Administrator has experience with DAFs Can make multiple donations with one securities trade Tax-deduction is taken upfront; 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 Donor Advised Fund Clyde Kunz & Associates LLC 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 Direct Gift to Charity 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 Donor Advised Fund Clyde Kunz & Associates LLC 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 Private 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 Donor Advised Fund Clyde Kunz & Associates LLC 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+ Private Foundation 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 Thank You! Clyde W. Kunz, CFRE ● (520) 977-4019 ● [email protected] www.ClydeKunz.com (“Resources” page for copy of PowerPoint presentation)
