TWP Canopy - Heal the Planet Beyond your Lifetime with Donor Advised Funds
*August is Make a Will Month and this is the third in a four part series about dedicating your legacy to a healthy climate future through Trees, Water & People (TWP).
Make TWP Remainder Beneficiary of your Donor Advised Fund
Donor Advised Funds, or DAFs, have become a popular tool for reducing tax exposure, and to facilitate philanthropic giving over time. You can receive an immediate tax deduction for funds you allocate to your DAF today, and then disburse them to charities at any pace you like.
At Trees, Water & People (TWP) we’ve seen DAF gifts increase in popularity over the past decade. We receive DAF gifts from over 30 different administrators, including community foundations, and the charitable arms of traditional investment firms like Fidelity Charitable and Vanguard Charitable.
Many people use DAFs as ways to engage family in philanthropy, and encourage a family culture of giving. You can name successors to manage the DAF after your life, or you can name a nonprofit like TWP as the charitable beneficiary that would receive the balance of your DAF either as a lump sum, or at an interval of your choosing.
Cash, stock, bonds, mutual funds, or cryptocurrency placed in a DAF become assets of the administrating entity, and are distributed to charitable organizations as recommended by the donor or their successors.
Funds in the DAF can grow over time when invested by the administrator, but ultimately this shouldn’t overshadow the purpose of the funds, which is to make an impact through gifts to charitable organizations. In fact, if DAFs are left idle, or no charitable beneficiary is named, the balance often just gets absorbed by the administrator, defeating the original purpose of the fund.
Because you receive a tax benefit once you create and fund your DAF, you don’t get an additional tax write off when you donate the funds to a nonprofit like TWP. Similarly, because the funds are irrevocably committed to the DAF, successors must also donate the funds to charity. Your DAF can be housed at a local community foundation, or at dozens of other national financial institutions.
So remember - starting a DAF is a great tax management strategy, and a great way to involve your family in charitable giving. But it’s a tool meant to be used regularly, by recommending grants every year through your DAF administrator. Naming Trees, Water & People as a remainder beneficiary of your DAF, ensures that funds will be put to work on TWP’s mission immediately upon your passing.
