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ExampleDAFs also offer the donor the ability to instill philanthropic involvement in the next generation. Many DAF agreements permit advisory privileges to be passed on to successor family members after the donor has passed away. These successor advisors would have the same involvement with recommending the DAF's investments and grant distributions allowing them the unique opportunity to be included in philanthropy.
Mallory typically takes the standard deduction when she files her income tax returns. She is a loyal supporter of her local social service charity and generally makes gifts totaling $5,000 per year. However, because she does not itemize, she does not realize tax benefits for her charitable contributions. Her tax preparer mentioned she could make one large gift this year to a DAF, essentially "bunching" her donations. By bunching, she could have the same charitable impact, but also realize the tax benefits of her charitable donations. If Mallory contributes $15,000 to a DAF, she can "bunch" her charitable contributions and stretch out her charitable impact to future years. She can use the DAF to make charitable gifts to her favorite charity for the next three years at her current giving level of $5,000, while taking a charitable deduction in the current year.
Sample Donor Advised Fund Agreement
This Donor Advised Fund Agreement ("Agreement") is made on the date specified below between Jane Donor and John Donor of Camarillo, CA (hereafter referred to as the "Donors") and the Favorite Charity of Camarillo, CA, a not-for-profit charitable organization (hereafter referred to as the "DAF Charity").
I. DAF Creation
The Donors hereby contribute to the DAF Charity the property specified in Attachment "A" as the initial contribution to the Donor Advised Fund (DAF). This value is equal to or greater than the minimum required DAF amount of [insert minimum DAF funding value]. The DAF Charity by resolution of its Board of Directors has approved the acceptance of gifts and bequests of property for the purpose of creation of DAFs. All DAFs shall be component funds and the exclusive property of the DAF Charity, subject to the control of the DAF Charity with respect to all distributions of income and principal. Funds will be named or appropriately designated as requested by the Donors.
II. Advisors
The Donors may advise the DAF Charity in writing regarding the distribution of the fund income and principal. In addition, the Donors may designate one person to act as their spokesperson in advising the DAF Charity. The Donors may designate in writing one or more persons, usually children, to serve as DAF Advisors for a term of up to [insert number] years after the deaths of the Donors. The DAF Charity is not obligated to follow the recommendations of the Advisors, but in its sole discretion may elect to make the recommended distributions.
In the event that no written advice is received by the DAF Charity with respect to distributions of income or principal for [number of years] consecutive years, or in the event of the deaths of the Donors with no appointment of a successor Advisor for the above term of years, the DAF Charity may deem that no person has further interest in advising with respect to the fund. In this circumstance, the DAF Charity may give written notice to the last known designated Advisor or spokesperson that the right to give further advice and counsel is terminated. Any remaining DAF assets shall then be the exclusive and unrestricted property of the DAF Charity.
III. Distributions from the DAF Fund
The DAF Charity may make distributions from the fund of principal and income. The Donors shall recommend at least annually the appropriate distributions. All recommendations shall be for distributions in amounts in excess of the minimum distribution established at the discretion of the DAF Charity Distribution Subcommittee, or any minimum distribution required under current or future state or federal law. No distributions shall be made to fulfill a legally binding pledge of Donors. Distributions shall be made to qualified Sec. 501(c)(3) charities or to qualified entities that are their integrated auxiliaries. All distributions shall be to qualified exempt charities, with a minimum of [insert minimum percentage] of distributions to [a selected field of interest or area for grant].
IV. Administration
The DAF Charity shall accept contributions and administer the fund in accordance with resolutions of the Board of Directors. These resolutions and policies may be amended as required by the Board. While the DAF is a component fund of the charity, the assets may be commingled for investment purposes and invested in units of any common investment fund of the DAF Charity. The DAF Charity shall have the right to convert any gifted property to securities or other assets of a common fund. Each fund may be assessed charges and proportionate investment costs similar to those applicable for similar funds managed by the DAF Charity.
V. DAF Remainder
This DAF is intended to be operational during the lives of the Donors. If Donors notify the DAF Charity in writing, a child or children may serve as successor Advisors for the permitted term of [insert number] years and the fund shall continue for that additional term. After the deaths of the Donors or the expiration of the term of years, as applicable, the fund shall become the exclusive and unrestricted asset of the DAF Charity. The Donors and, if selected, the child or children of the Donors, may, prior to the termination date, make recommendations for distribution of principal from the fund upon the termination date.
VI. DAF Provisions
This DAF agreement is irrevocable. Nevertheless, solely to ensure that the fund is a qualified component of the DAF Charity for Federal tax purposes, the DAF Charity, acting alone, shall have the power to modify the terms of the agreement solely to the extent required to ensure such qualification. The agreement shall be governed by the laws of the State of [insert state name].
IN WITNESS WHEREOF and in grateful appreciation, the DAF Charity and the Donors have executed this Agreement on the date specified below.
_________________________________________ Date: _________________________
Jane Donor
_________________________________________ Date: _________________________
John Donor
By __________________________________Title_________________ Date:_________
Officer of DAF Sponsoring Charity
Designating Beneficiaries for Retirement Accounts, Part III
Designating Beneficiaries for Retirement Accounts, Part II
Designating Beneficiaries for Retirement Accounts, Part I
A charitable gift annuity is a great way you can make a gift to our organization and benefit. You transfer your cash or property to our organization and we promise to make fixed payments to you for life at a rate based on your age.
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