For many years, in America, the fastest growing tool for giving has been something called a Donor Advised Fund. Conveniently, it is called a DAF. Our Foundation has several DAF accounts. DAFs allow someone to contribute money, park it in an account, and then give the money sometime in the future. They receive a tax benefit the year they give to the DAF, even though the money may be given in subsequent years. The giver “advises” our Foundation as to the place and amount of the gift.
So, why would givers create a DAF? One reason might be they want a tax benefit, but do not yet know the places or times they will give. Let’s say that I received an inheritance, of which I want to tithe $20,000. Some of that I plan to give my church, but I am unsure how I will give the rest. A DAF gives me time to figure that out.
Perhaps I am a person who gives $7,500 per year to ministries and non-profits. With the IRS standard deduction now at $12,550, I may want to put $15,000 into my DAF one year (and receive the tax benefit) but give it to my church over two years. That way, I get at least one year of tax benefit—every other year.
DAFs are investments that can grow tax free over time. Depending on the investment of assets the earnings could add significantly to the original gift. Many people like that idea.
People fund DAFs with cash, stocks, business interests, or other assets. A DAF can be funded in a lump sum, or you can contribute to them on a regular basis. Once the money is put into a DAF the funds can only be used for charitable purposes. You cannot take the money back.
Our Foundation has experience setting up and managing DAF accounts. Should you, or someone you know, have any interest in opening their own account, we would be ready and able to serve them. Pass the word. DAFs have a funny name, but they are a powerful avenue for blessing both the receiver and the giver.
For support with your church’s stewardship and giving, contact your United Methodist Foundation here or by calling us toll free at 877-391-8811.
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Director of Development
United Methodist Foundation of Indiana