By: Jen Panattoni
As a donor, you may have come across the term Donor Advised Funds (DAF), but what exactly are they, and how can they be used to donate stock to charity? We hope this blog answers your questions and provides insights on how you can contribute to the American Foundation for Children with AIDS using a Donor Advised Fund.
What is a Donor Advised Fund (DAF)?
DAF is a charitable giving account that allows donors to make grants to their favorite nonprofit organizations. A sponsoring organization, such as a community foundation or a financial institution, administers these funds. Donors can contribute cash, securities, or other assets to the fund and receive an immediate tax deduction for their charitable contribution.
Donor Advised Funds are popular among donors because they offer several benefits, such as flexibility, anonymity, and reduced paperwork. Once you contribute to the fund, you can advise the sponsoring organization on which charity to support, when to donate, and how much to give.
How can I donate stock to the American Foundation for Children with AIDS using DAF?
If you wish to donate stocks to the American Foundation for Children with AIDS, you can do so using Donor Advised Funds. Many DAF sponsors, such as Fidelity Charitable, Schwab Charitable, and Vanguard Charitable, accept stock donations as a part of their services. AFCA has partnered with The Giving Block to accept these funds. You can transfer the shares to the DAF account and get an immediate tax deduction for the total fair market value of the stock. Additionally, by contributing appreciated securities, you can avoid paying capital gains tax, which means more money goes to your preferred charity.
“ When you donate crypto and stocks to charity, you not only get the same write-off as a cash gift, but you owe no taxes on the assets you donate. That means for every $10,000 you give, you can save up to $3,000 or more on taxes by ditching the cash.”According to The Giving Block.
Using a donor-advised fund to donate stocks also allows you to benefit from the power of compounded giving. The American Foundation for Children with AIDS can sell the stock and invest the proceeds in a way that will produce more funds for future grants. This way, your charitable giving can help support more causes for years.
What should I consider before opening a Donor Advised Fund?
When opening a Donor Advised Fund account, there are several factors you should consider. Firstly, finding a sponsoring organization that aligns with your giving goals is essential. Organizations offer different investment options, fees, minimum contributions, and grant-making policies. Research and compare the sponsors to find one that suits your needs.
Secondly, ensure that you have a clear plan for your DAF giving. Having a budget, a giving strategy and a list of charities you wish to support will help you make more intentional and strategic donations.
Thirdly, understand the tax implications and regulations governing DAF donations. While DAFs are tax-advantaged, they are still subject to federal and state laws. Work with a tax advisor to ensure you understand the tax benefits and limitations of DAFs.
Donor Advised Funds (DAFs) offer a convenient and tax-efficient way to donate stocks to the American Foundation for Children with AIDS. Not only do they give donors the freedom to recommend grants, but they also help charities grow and invest in impactful projects. However, before opening a DAF account, you should consider the sponsor’s policies, have a giving plan, and understand the tax implications and regulations governing your donations. Doing so will make a more informed and impactful contribution to the American Foundation for Children with AIDS.
AFCA has partnered with The Giving Block to quickly and securely accept Donor donor-advised funds and stock contributions donations. With their expertise and knowledge, donors can be sure that their offerings comply with tax regulations and maximize the impact of their gift. Donating stock through The Giving Block gives donors access to a streamlined onboarding process, simplified reporting for DAFs (including donor-advised fund fees) and secure transactions.