Four Signs a Donor Advised Fund Might Be the Best Advice

The relationship between a financial advisor and their client is built on trust, experience, and a mutual understanding of the client’s investment and life goals. For philanthropically-inclined clients who are entering a significant life event, such as the sale of a business or property, and wish to make a decision about managing their charitable giving or leaving a legacy, they will likely seek advice from their trusted financial advisor.

In this case, the financial advisor has several options to support their client depending on the client’s circumstances and goals. Among these options is a Donor Advised Fund (DAF). Although the advisor knows their client the best, there can be confusion around when a DAF is the right tool for a particular situation. The following are four signs a DAF might be the best solution and how Gift Funds Canada can assist financial advisors in supporting their clients today and over time.

1. DAF as a planning tool

Whether the goal is leaving a legacy, managing a client’s philanthropy or establishing a plan for future giving, a DAF is an effective tool for Financial Advisors to educate their clients and help them realize their philanthropic goals. A DAF can be established with as little as $25,000 and enables advisors to help their clients take advantage of potential tax benefits, generate more money over time, and maintain flexibility over where funds are allocated. This giving structure sets up the financial advisor to work with their clients over time and tailor a strategy to their evolving needs.

2. Helping donors maintain gift flexibility

Donors might think that making a gift directly to their preferred charity is the simplest way to ensure their contribution is allocated to the area they wish to support, but this is not always the case. As many financial advisors know, gift agreements may have terms that redirect funds if there is a change to the initial funding area, such as the end of a program. A DAF established from the outset, can be a useful tool for financial advisors to help their clients maintain the flexibility to oversee the allocation and amount of their gift. Gift Funds Canada not only helps to establish the DAF but can support advisors with resources and professional expertise for just about every unique giving circumstance.

3. Donors who want anonymity

Donors sometimes whish to make a significant gift to their favourite charity but would rather not have the public attention that goes along with it. Setting up a DAF through Gift Funds Canada enables a donor to invest in a fund that can grow over time and when the fund pays out to the charity of their choosing, the donor’s identity can be safeguarded. Messages of gratitude or other communications can be sent to the investment advisor who can keep the donor informed over time.

4. Donors who wish to give nationally

Some donors may wish to make an impact within and beyond their local community, in this case a DAF might be the right choice. Establishing a DAF enables donors to work with their financial advisor to support their preferred causes with the potential to have national impact.

The decision whether a DAF is right for a particular situation should reflect the donor’s motivations and align with their philanthropic and investment planning goals. Tools like a DAF, supported by the professional expertise and resources from Gift Funds Canada can add significant value to a financial advisor’s services, while providing donors with greater options and flexibility to make a positive impact to their favourite charity.