Savvy advisors add value to the client relationship by offering a higher level of service and more sophisticated advice to their clients. One important aspect of this enhanced service is the ability to have informed conversations about charitable giving, during the clients’ lifetime and as part of the legacy planning. Last year, we gave you tips on how best to have the philanthropy conversation with your clients. In this Advisor Update, let’s take a look at just who is a good candidate for using a donor advised fund for their charitable giving. Clients of any age and across a wide spectrum of wealth can all benefit from using a DAF.
Consider speaking about DAFs with:
- Clients who have difficulty tracking their donations and are frustrated with saving the many gift receipt letters from the various charities they support.
- Clients who want to support their favorite causes and charities without spending time on the recordkeeping and administrative aspects of giving.
- Clients who seek an efficient, tech-savvy way to make charitable donations online.
- Clients who have or will experience a wealth event such as an inheritance or a bonus.
- Clients who have highly appreciated securities and are concerned about the capital gains tax, or who frequently ask their advisor to transfer stock to many different charities.
- Clients who may want to contribute complex assets such as privately held corporations and real estate.
- Clients seeking an easy to use charitable vehicle to replace a private foundation, or a streamlined way to make distributions from CLATs to many different charities.
- Clients who may be looking for ways to give back.
- Financially secure clients who have been impacted by adversity, loss or another difficult situation.
- Clients who seek privacy and may wish to be anonymous with some or all of their giving.
- Younger clients who want to establish a baseline for giving that will grow over time or who wish to involve their young children.
- Clients who want to involve children or grandchildren in charitable giving as a way of transmitting their values, and continuing their legacy of philanthropy.
- Clients who have already retired and now have time and money to get involved with philanthropy.
- Couples or individuals without heirs who may wish to create a meaningful legacy .
Do your clients a favor by recommending a vehicle that does not have set-up costs, is easy to use, and has minimal administrative fees. One of the many advantages of a DAF over a private foundation or checkbook charity is that clients can receive the maximum tax deduction on the entire donation when the fund is established, yet grants can be made over time on a flexible schedule. Another important feature is that assets in DAFs grow tax-free, and JCF permits our private clients to request that their advisors be vetted to manage the assets in their JCF fund.
Year-end is the ideal to have the conversation about charitable giving with your clients. And with so much uncertainty around potential changes in tax laws, encouraging their clients to “pre-fund” their future charitable giving by setting up or adding to an existing DAF is smart advice. Clients will appreciate your guidance with locking in the current, generous charitable deduction, and you can be sure that at JCF they will receive the highest level of service. Please feel free to call us with any questions about donor advised funds and helping your clients with their philanthropy.