Here's how to donate to a Top 10 CNN Hero

Anderson Cooper explains how you can easily donate to any of the 2018 Top 10 CNN Heroes, through CrowdRise. Conditions apply.

Posted: Dec 13, 2018 1:46 PM
Updated: Dec 13, 2018 2:02 PM

I've heard a lot about donor advised funds. Are they a good way to structure my charitable giving while getting tax benefits?

A donor advised fund is a relatively simple, flexible and tax-efficient way to grow your investments and give to charity.

Think of it as a dedicated account for your charitable giving. It allows you to contribute cash, securities or other assets to the fund and get an immediate tax deduction. You maintain control of your investments, which grow tax-free since they are charitable donations, and make grants to the IRS-qualified charity you choose.

You can open a fund with as little as $5,000. All the money you put in goes to charity (once it's in, you're not getting it back), but you get an immediate tax break. Deciding how the money gets distributed is up to you: dole out $2,000 every year to a bunch of different charities, for example, make a significant gift of a $1 million ten years from now, or create a fund as a legacy for your children to continue to distribute after your death.

"Donor advised funds are one of my go-to strategies for reducing taxes for people who are already charitable," says Patrick King, a certified financial planner with Transformative Financial.

Here's how to figure out if a donor advised fund is the best way to accomplish your giving goals.

The benefits

Opening a fund is relatively easy. You can do it through many public charities such as Fidelity Charitable, Schwab Charitable, the National Philanthrapic Trust or a community foundation. You just need a Social Security number and at least $5,000 to invest, though some charities may have higher minimums.

If you donate cash, you're eligible for a tax deduction of up to 60% of your adjusted gross income.

But the real appeal of donor advised funds for many investors is that they might accept a wide variety of donations — including publicly traded securities, restricted stock, mutual fund shares, cryptocurrencies, private equity and hedge fund interest, real estate or privately held C-corp or S-corp shares — that charities often cannot accept.

"Donor advised funds have gotten to a place where they can take more complex assets," says Tina Davis Milligan, managing director of family office services at BMO wealth management. "A lot of clients have large capital gains and they may give more than they planned because it becomes more meaningful."

This is where investors can find very favorable double tax benefits. If you give these appreciated assets directly to a donor advised fund, you can, first, avoid paying capital gains tax and, second, take an additional income tax deduction in the amount of the full fair market value of the asset, up to 30% of your adjusted gross income.

A donor advised fund could make a great deal of sense right before retirement, says Michael Troxell, an investment adviser and certified public accountant with Modern Financial Planning.

"While a near-retiree is still working and in a high tax bracket, they could contribute a large amount of charitable giving (say 10-20 years worth) to a DAF in order to maximize the tax benefit while being able to distribute the funds to charitable organizations over the course of their retirement," says Troxell.

A good time to establish or add money to your fund is after a significant swell in assets — maybe a retirement payout, an unusually high bonus or the sale of a company.

"When a client has a big year, a donor advised fund can 'front load' their charitable giving for future years while providing a large charitable deduction in the year they need it most," says King.

The pitfalls

Like any investment, the value of a donor advised fund fluctuates. Don't get in over your head with a fund that includes costly or risky investments, says Dan Stous, the director of financial planning at Flagstone Financial Management.

Another mistake is opening a DAF with a high-cost provider. "There may be some premium services offered by some providers to justify a fee, like acting as a consultant to connect the giver with charities in their community, or talking through complex gifting situations, but givers should know what they're paying, and know what they're getting for that fee."

But the biggest pitfall with a DAF is to simply view it as an investment or tax-reduction vehicle, says Stous.

"Ultimately, donor advised funds are a way to give to charity," he says. "If your primary reason for putting money in a fund is something other than a generous heart, you're setting yourself up for disappointment."

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 308737

Reported Deaths: 7139
CountyCasesDeaths
DeSoto20901250
Hinds19953410
Harrison17551302
Rankin13358276
Jackson13141243
Madison9949211
Lee9886170
Jones8308161
Forrest7537147
Lauderdale7221237
Lowndes6286144
Lamar613284
Lafayette6063117
Washington5288133
Bolivar4775129
Oktibbeha457097
Panola4456103
Pearl River4433141
Warren4294118
Marshall4283101
Pontotoc417572
Monroe4061132
Union404675
Neshoba4001176
Lincoln3883109
Hancock373385
Leflore3470124
Sunflower330789
Tate325082
Pike3205105
Scott311272
Yazoo304769
Alcorn298865
Itawamba297477
Copiah293965
Coahoma290378
Simpson289486
Tippah285168
Prentiss276559
Marion266279
Leake261473
Wayne261441
Grenada256284
Covington254980
Adams246882
Newton245561
George238347
Winston226081
Tishomingo222467
Jasper219948
Attala213573
Chickasaw205257
Holmes186972
Clay183054
Stone179531
Clarke177576
Tallahatchie175940
Calhoun165231
Yalobusha159736
Smith159234
Walthall131043
Greene129633
Lawrence126623
Noxubee126533
Montgomery125742
Perry125238
Carroll120926
Amite120741
Webster113732
Jefferson Davis105432
Tunica103025
Claiborne101330
Benton97425
Kemper95628
Humphreys94432
Franklin82723
Quitman78916
Choctaw73717
Wilkinson64928
Jefferson64828
Sharkey49817
Issaquena1686
Unassigned00

Alabama Coronavirus Cases

Cases: 521201

Reported Deaths: 10736
CountyCasesDeaths
Jefferson753981490
Mobile39011799
Madison34002496
Tuscaloosa25329444
Montgomery23996567
Shelby23160239
Baldwin20674302
Lee15567165
Calhoun14330311
Morgan14152271
Etowah13677346
Marshall11988220
Houston10402278
Elmore10008200
Limestone9843147
Cullman9501189
St. Clair9449234
Lauderdale9254228
DeKalb8756181
Talladega8104171
Walker7126275
Jackson6751110
Autauga6748103
Blount6511134
Colbert6225130
Coffee5418113
Dale4771111
Russell429338
Franklin420582
Chilton4100109
Covington4059114
Tallapoosa3904146
Escambia389574
Dallas3522149
Chambers3513122
Clarke346760
Marion3072100
Pike306176
Lawrence295395
Winston273072
Bibb256059
Marengo248261
Geneva245975
Pickens233059
Barbour226255
Hale218675
Butler212867
Fayette209460
Henry188044
Cherokee182544
Randolph177041
Monroe172440
Washington164738
Macon155548
Clay150055
Crenshaw149457
Cleburne146341
Lamar139634
Lowndes136553
Wilcox124527
Bullock121540
Conecuh109428
Perry107626
Sumter103232
Coosa99428
Greene91334
Choctaw58724
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