Keep the joy of giving alive year-round with a donor-advised fund

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Giving to the causes you care about may be top of mind for you during specific times of the year — the holidays, for example, or when your alma mater comes calling during spring reunions. But as you write out checks or donate online, don't you often wish there were a more organized and thoughtful way to make a difference year-round? A way to plan ahead and have a more powerful and long-lasting impact?
If so, you may be ready to consider a donor-advised fund. It's a more structured way of giving than writing out individual checks, and one that's growing in popularity. "Donors contributed $29.23 billion to donor-advised funds and used them to recommend $19.08 billion in grants to qualified charities in 2017" — record highs in both categories, notes the National Philanthropic Trust in its 2018 Donor-Advised Fund Report. Donor-advised funds are "a one-stop shop, offering you an immediate income tax deduction and gift receipt upon donation, as well as the opportunity to make grant recommendations to the charities you support over time," says Cale Turner, senior vice president and Charitable Gift Fund manager at Bank of America Private Bank.
Graphic of a tree on top of an image of a letter. The text reads: Giving with a donor advised fund? Here's what you get. Growth: The potential for growth of your contributions.
The minimum deposit varies depending upon the fund. Your donation can be in the form of cash, stock, mutual fund and ETF shares, even real estate and other nonfinancial assets, without incurring capital gains taxes. If your employer offers a matching gift program, you may want to ask its administrator whether the program allows a match to a donor-advised fund. To add to the convenience, a donor-advised fund is easy to set up and maintain, and you can manage all of your giving activities online.
It's important to note that once you donate to a donor-advised fund you give up ownership of those assets. So be certain that you only put in money that you want to, and can afford to, give away. But, all things considered, donor-advised funds compare favorably with other structured ways to organize your giving. For instance, with a donor-advised fund you can avoid the higher costs, administrative hurdles and annual distribution minimums of a private foundation.
Below, Turner points to three ways a donor-advised fund could help you simplify your giving all year-round — and for years to come.

Gain immediate tax benefits

It works like this: You can put a lump sum into a donor-advised fund and then have the fund distribute cash to organizations of your choice at your own pace. Says Turner, "You get the maximum income tax deduction immediately, even if the assets aren't distributed right away." You may also receive income tax-free growth of the assets in the fund, as well as the ability to carry forward any unused charitable income tax deduction for up to five years. In exchange, you relinquish ownership of the assets you donate, but you retain the right to recommend how those assets should be distributed.
"Tax payers looking for ways to exceed the higher standard deduction set by the 2017 tax law might consider pooling several years' worth of charitable donations into a single contribution to a donor-advised fund," suggests tax authority Andrew Friedman, principal and founder of The Washington Update.

Organize your giving in one place

Rather than making donations to individual charities and requesting receipts from each, you can take much of the paperwork out of the process through a donor-advised fund. As Turner notes, "Those things are taken care of — the system allows you to hold on to all those documents in one safe and secure location."

Enable your contributions to grow

"A donor-advised fund gives you the ability to invest your contributions in portfolios with asset allocations ranging from conservative to aggressive," Turner says. That means the assets you've placed in the fund are professionally managed and have the potential to continue growing. "And what that does," Turner adds, "is to potentially give you more dollars to support the charities you care about most."
Next steps

Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed, or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.

Trust and fiduciary services are provided by Bank of America Private Bank, a division of Bank of America, N.A., Member FDIC, or U.S. Trust Company of Delaware. Both are wholly owned subsidiaries of Bank of America Corporation.

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