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Giving Through A Donor Advised Fund

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Across Canada and around the world, donors choose to give for any number of reasons. Often the motivation to make a gift to charity can be emotional, circumstantial, or both.

“A donor may have experienced a significant cash event such as an inheritance or sale of an asset that inspires them to consider a gift in the current year.”

Some donors may be inspired to support their local community by responding to a direct response fundraising campaign, or they may be reacting to a larger relief effort in response to an international humanitarian disaster. In some cases, it is a donor’s circumstances that give them the opportunity to consider their philanthropy. A donor may have experienced a significant cash event such as an inheritance or sale of an asset that inspires them to consider a gift in the current year.

No matter the motivation, gifts of cash continue to be the most common form of giving. However, some donors feel the timing and tax considerations may not allow them the opportunity to fully consider where to focus their philanthropy, or they may not wish to gift all their available funds to a single charity in one gift. This can add unnecessary pressure to the donor’s decision to support a charity they believe in, which should be a positive experience.

Giving through a Donor Advised Funds (DAF) can provide donors with options and flexibility for their giving intentions, and present benefits they may not have considered.

Take the time needed to provide informed support

By using a DAF, a donor will receive an immediate donation receipt and can nominate their preferred investment professional to manage the investment. Donors can continue to work closely with their trusted financial advisor and take the time they need to recommend the desired recipients of the available grant money from their funds, while leaving a gifting legacy for generations to come.

Be efficient with tax advantages

It is not uncommon for many donors to enjoy the ease and efficiency of making several cash gifts throughout the year. These same donors may be holding a portfolio of appreciated securities, which can be problematic for some charities to accept or the donor may not wish to sell for investment reasons. In this case, opening a DAF and making a gift of appreciated securities to it could lower the donor’s after-tax costs of philanthropy. They could also then use the cash they would have historically gifted to charity to buy back replacement securities. In this case, they would hold the same investment portfolio and they would have reset their adjusted cost base (ACB) reducing their future tax liability.

Partner with a credible charitable foundation

Investment professionals also benefit from partnering with a credible charitable foundation like Gift Funds Canada, who will help set up a new DAF, and navigate the complexities of any gift agreement. Gift Funds Canada acts as the administrator of the fund over the fund’s lifetime, so the set-up, accounting, and the investment management of the assets is all taken care of allowing the investment professional to focus on their client and the donor to focus on their gift’s impact. Partnering with Gift Funds Canada to establish a DAF also provides access to professional expertise enabling the financial advisor to provide greater support and resources to the donor and the positive impact they can have on their preferred charity.

No matter what the donor’s motivation, a Donor Advised Fund can be a good option for the those who are able to make a philanthropic gift but may need more time or flexibility than a common gift of cash allows.