What is a DAF, DAF benefits, and the three Donor Advised Funds in Memphis, Tennessee
When you find an organization near and dear to your heart, you want to make the most of your donations to that cause. A donor-advised fund (DAF) is a charitable investment account offering an optimal way for a donor to increase their charitable impact without increasing their tax liability. A DAF is one of the fastest-growing charitable options in the United States. When a donor contributes cash, securities, or other assets to a donor-advised fund, they are eligible to take an immediate tax deduction. After making the donation, those funds can be invested for tax-free growth and distributed to nonprofit organizations at the donor's pace.
Donor-Advised Fund Benefits for the Donor
- Tax Deductions
You can claim a tax deduction in the year you contribute assets to the DAF, rather than wait until you make a charitable contribution.
For example, if you typically donate $1,000 per month to charity (or $12,000 per year), you could essentially prepay for years ahead by putting $60,000 in a DAF at once. The DAF would use the money to allocate $1000 per month to the charities as usual, but you would receive a $60,000 tax deduction this year instead of $12,000 every year for the next five years. Receiving a large deduction in one year could be worth more than smaller annual deductions.
- Lower Capital Gains Taxes
You will NOT pay capital gains taxes on assets you put into a DAF, and if you donate assets that are worth more than what you paid for them, you typically can deduct the current market value of the asset rather than what you originally paid.
- Reduced Estate Tax
It’s rare that people have to pay estate taxes. In 2022, estate taxes only apply to those with estates of more than $12.06 million. If you’re one of the few, putting money in a DAF can reduce the size of your taxable estate.
Assets you put into a DAF are NOT subject to estate taxes, so they don’t count toward your total estate value.
- A Legacy of Giving
When estate planning, you can make a bequest in your will so any remaining assets in your DAF are dispersed to charities of your choice once you pass. There is also the option to pass the assets to heirs so they can take over your charitable giving.
- Anonymity
There are times when individuals wish to remain anonymous in their giving. With a DAF you can choose to withhold your identity and grant gifts anonymously.
Facts to Consider
- Find a donor-advised fund that fits your philanthropic goals
- The funds to a donor-advised account cannot be returned to the donor or any other individual or used for any purpose other than grantmaking to charities
- Administrative fees
- Minimum donation amount
The Process
- Establish a donor-advised fund account
- Make a tax-deductible donation to a donor-advised fund - donate cash, stocks, or non-publicly traded assets such as private business interests, cryptocurrency, and private company stock
- Advise the account on when and where to distribute your money
- Grow your donation, tax-free
Donor Advised Funds in Memphis, TN
Community Foundation of Greater Memphis
The mission of the Community Foundation of Greater Memphis is to strengthen the community through philanthropy. To accomplish this mission, the Community Foundation will:
- Develop and effectively manage charitable funds and endowments, offering the highest levels of service and expertise to individuals, families, and institutional donors and their successors
- Actively address the needs of the community by examining community issues, securing and distributing resources, advocating for positive change, and convening meetings and conversations which encourage donors and the community to respond
- Encourage philanthropy and the growth of charitable resources among individuals, families, businesses, and community institutions
Last year, the Community Foundation:
- Received $168.7 million in gifts
- Awarded $138.4 million in nonprofit grants
- Awarded 7,052 grants to 2,068 nonprofit organizations
Christian Community Foundation
The Christian Community Foundation is a Christian nonprofit, community-based foundation whose purpose is to help Christians share their resources in efficient and strategic ways. Founded in 1992, the Christian Community Foundation has granted more than $642 million to thousands of churches and ministries worldwide.
They encourage philanthropy and increase giving by seeking transformation of the city of Memphis. Some of the Christian nonprofits or ministries that they support include youth, campus, family and housing, economic development, education, financial management and literacy, healthcare, athletics, juvenile offenders and prison, pregnancy counseling and adoption, and missions.
Last year, the Christian Community foundation awarded:
- $80 million in grants
- $42 million grants to Memphis organizations
The Jewish Foundation of Memphis
The Jewish Foundation of Memphis serves as the primary philanthropic resource for Jewish families, their financial advisors, and others in the Memphis community. Since its inception, they have worked to secure the financial future of the local Jewish community. Chartered as Jewish Community Development, Inc. on September 7, 1995, the Jewish Foundation of Memphis began its mission of encouraging charitable giving, supporting partner agency endowment development, and building and sustaining a vibrant Jewish community.
The foundations participating agencies care for the needs of today and build for the community of tomorrow by improving lives, sustaining and promoting the Jewish community, and funding innovative programs in Israel and around the world.
As of 2022, assets managed by the foundation exceeded $110 million and the funds were allocated as follows:
- 63% to Jewish organizations in Memphis
- 15% to Memphis community organizations
- 14% to national Jewish organizations
- 8% to national secular organizations