Donor-Advised Funds & Stock Gifts

What is a donor-advised fund?

A donor-advised fund (DAF) provides donors with a centralized charitable giving vehicle.

It allows philanthropically inclined individuals, families, and corporations to make an irrevocable charitable gift to a public charity that sponsors a DAF program and take an immediate tax deduction. Most sponsoring organizations of DAFs accept cash equivalents, securities, and certain other assets.

How does it work?

  • Establish your Donor Advised Fund by making an irrevocable, tax-deductible donation to a public charity that sponsors a DAF program
  • Advise the investment allocation of the donated assets (any investment growth is tax-free)
  • Recommend grants to qualified public charities of your choice, such as NorCal GSP Rescue

Main Advantages of a Donor Advised Fund

  • Simplicity – The DAF sponsor handles all record-keeping, disbursements, and tax receipts.
  • Flexibility – The timing of your tax deduction can be separate from your charitable decision-making.
  • Tax-efficiency– Contributions are tax-deductible and any investment growth in the DAF is tax-free. It is also easy to donate long-term appreciated securities, eliminating capital gains taxes and allowing you to support multiple charities from one block of stock.
  • Family legacy – A DAF is a powerful way to build or continue a tradition of family philanthropy.
  • No start-up costs – There is no cost to establish a donor-advised fund. However, there are often minimum initial charitable contributions to establish the DAF (typically $5,000 or more).**
  • No transaction fees – Once approved, 100% of your recommended grant goes to your qualified public charity of choice.**
  • Privacy if desired – Donors may choose to remain anonymous to the grant recipient. But we would like to be able to thank you, so please let us know even if you prefer that we not publicize your name in any manner.

** Sponsoring organizations generally assess an administrative fee on the assets in a DAF. These fees vary by the charity that sponsors a DAF Program.

How it works (Detail):

  1. An individual or entity makes an irrevocable contribution to a sponsoring charitable organization to establish a donor-advised fund. This person becomes a donor-advisor.
  2. The sponsoring organization allocates the charitable contribution to the particular donor-advisor’s DAF. The donor-advisor has the opportunity to name the DAF (e.g. The John Doe Fund).
  3. The donor-advisor retains advisory privileges over the investment allocation for the DAF. Since the assets in the DAF belong to the sponsoring organization, any investment growth is tax-free. The investment options available vary by sponsoring organization.
  4. The donor-advisor has advisory privileges over the disbursements made from the DAF. The disbursements are recommended by the donor-advisor, but must meet the grant-making criteria of the sponsoring organization. Typically, disbursements may only be recommended to IRS-qualified public charities exclusively for charitable purposes. Additionally, the donor may not receive any more than incidental benefits as a result of the disbursement.
  5. Once the sponsoring organization approves the recommended disbursement, the grant is made to the qualified charitable organization. Note: often, the sponsoring organization does not include any details about your gift it its communications with the qualified charitable organization, so we really appreciate it when you let us know a gift is coming!

Widget - Advise a Disbursement

 


Stock Gifts

It's simple to make a stock gift, whether you go through your broker or handle it yourself online at your brokerage house. Here's the information you'll need to transfer stocks:

Account Title: NorCal German Shorthaired Pointer Rescue Inc.

Account Number: 31296193

Receiving Institution: Vanguard Brokerage Services

DTC Transfer Number: 0062

For individuals who have a stock portfolio, donating stock is the smartest way to support causes you care about.

Here’s why: Donating stock save on two types of taxes

  • When stock is given directly to a non-profit organization, you avoid all capital gains taxes (and state income tax on capital gains)
  • You also receive a federal income tax deduction for the full present value of the stock (and in some states, a state deduction too)

Example:

Donor profile: Christian is the Senior Director of Media and Entertainment at the Walt Disney Group. He is 45 years old and currently lives in Santa Monica with his wife, two daughters, and their dog, Scruffy.

  • Christian bought 200 shares of Netflix in 2005 for $1,000.
  • Today, his shares are worth $101,000.
  • His “Capital Gain” is $100,000.

When Christian donates his stock:

  • He avoids $20,000 in federal capital gains
  • He avoids 13.3% ($13,300) on state income taxes
  • He also avoids 37% ($37,370) on federal income taxes
  • Total tax avoided = $70,670 (70% of his gift)

Christian is able to fulfill his $100,000 pledge for less cost to him!

Some donors, like Ruth and Larry, do not want to change their portfolio. Donating stock is still the smartest way to support our mission! You can keep your portfolio the same and save on future capital gains.

Example:

Donor profile: Ruth and Larry are a retired couple based in Chicago, Illinois. They are both 65 years old and are looking for smart ways to make their annual gift.

  • They bought 10 shares of Amazon in 2019 for $10,000.
  • Today, the shares are worth $30,000
  • Their “Capital Gain” is $20,000.
  • They would like to hold on to this stock to help support their grandchildren’s college fund.

When Ruth donates their shares:

  • They avoid $3,000 in capital gains and state income tax
  • They still avoid 4.95% ($990) on state income taxes
  • They still avoid 22% ($6,600) on income federal taxes
  • Total tax avoided = $10,590 (25% of her gift)

What if I don’t want to change my portfolio?

Stock giving is a win-win, even for people who don’t want to change their portfolio. You can always donate shares of appreciated stock, then buy the same shares. When you do this, you eliminate all the capital gains on those shares, and your “cost basis” is reset to the current price, potentially saving you enormous amounts in the future.

The information here is provided for educational purposes only and is not intended to provide, and should not be construed as providing legal or tax advice. This information is general in nature and is not intended to serve as the primary or sole basis for investment or tax planning decisions.

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