Donor-Advised Funds: Charity at Its Easiest

Utilizing donor-advised funds has become a popular method of giving to charity. While this is still a relatively new way to give there are many donor advised funds to choose from. Here are the basics of donor advised funds and how to use them.

What Are Donor Advised Funds?

For many years people have been giving to charity in order to help others and take advantage of tax benefits. However with today's fast-paced schedules, it can sometimes be difficult to stay involved. With this in mind, donor advised funds were created. A donor advised fund is a vehicle that allows a third party to handle your donations for you. Instead of going through the process of choosing charities, deciding how much to give to each, and actually making the donation, you can have someone else do it for you. This makes a donor advised fund or the most convenient ways to get to charity.

How They Work

Donor advised funds can be used by individuals, families, companies and organizations. There are currently over 125,000 donor-advised funds available to work with. The organizations that run these funds are charities themselves. Therefore, donors will get the maximum deduction available when they donate. The funds have low costs associated with them and they are very easy to use. You can work with a number of different providers and choose the types of charities that you want to donate to. Each fund works with the different select group of charities so you have some control over where your money goes.

Who Offers Donor Advised Funds

You can find donor advised funds a variety of different places. Some of the largest brokerages in the world offer these funds as part of their service. Brokerages like T. Rowe Price, Charles Schwab, Fidelity, and Vanguard are a few of the names that are involved. This makes it an easy way to contribute when you already have an investment account with these brokers. You simply transfer some money from your account over to these funds and they handle the donation aspect of it. You can even have a certain amount automatically deducted from your account each month if you desire.

Benefits of Donor Advised Funds

  • Convenience- One of the big excuses that people often give for not giving to charity is that they simply do not have the time to do it. With donor advised funds, that is no longer an issue. You can get involved with a donor advised fund and someone else will handle it all for you.
  • Low costs- Working with a donor advised fund is also a low cost option. These funds are very efficient and they have minimal operational costs involved. This way, you can ensure that the money goes where it needs to go.
  • Tax benefits- One of the biggest benefits of working with these funds is that you can get a major tax deduction. Any money you give these funds can be deducted directly from your taxable income.
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