The Tax Advisor's Guide to Leveraging Donor-Advised Funds
Tax advisors are often the most trusted source of guidance when it comes to managing a client's financial strategies, and many of your clients are likely interested in a donor-advised fund as a tax-advantaged giving solution.
$356B+
held in donor-advised funds nationwide
3.56M
DAF accounts nationwide
$200B+
charitable assets supported by Ren
Why Are Donor-Advised Funds So Popular?
Immediate Tax Deduction
Take a deduction the year of the contribution, with the freedom to grant over years to come.
Reduce Income & Avoid Capital Gains
Contributing appreciated stock or complex assets helps clients avoid capital gains taxes while reducing their taxable income.
Streamlined Charitable Giving
Consolidated record-keeping means no more writing checks, tracking receipts, or managing follow-up from multiple charities.
Tax-Free Growth
Assets in the DAF grow tax-free, allowing greater impact when the funds are distributed to charities.
An Investment Account for Giving
A DAF lets charitably inclined clients optimize their charitable impact while managing tax exposure.
How DAFs Work
Contribution
You contribute cash, securities, or other assets to a DAF and are eligible for an immediate tax deduction.
Investment
The funds you contribute can be invested, growing tax-free over time.
Granting
Over time, you recommend grants to IRS-qualified public charities based on the causes you care about.
Common Scenarios for Clients Considering a DAF
Clients who:
- Are already giving to charity and looking to simplify recordkeeping
- Wish to give anonymously
- Want a current-year tax deduction along with the ability to give over time as part of a tax strategy
- Are looking to diversify concentrated stock positions
- Are selling a business or receiving an inheritance
- Are in the process of estate planning
- Are approaching retirement
- Want to create a philanthropic legacy
How to Approach DAFs with Clients Nearing Retirement
Final year of employment: Encourage clients to make a large gift in their final working year to offset AGI. The donation grows tax-free and can be distributed over time.
Post-retirement: Clients can continue contributing appreciated stock or assets instead of cash, allowing them to avoid capital gains tax while maintaining a tax-efficient charitable strategy.
What Types of Assets Can Be Contributed to a DAF?
| Asset type | Example |
|---|---|
| Cash | Currently allows the highest charitable deduction in a single tax year |
| Appreciated securities | Allows a charitable tax deduction and avoidance of capital gain |
| Private business interests | Shares of a family-owned business or startup |
| Real estate | A vacation home or commercial property |
| Retirement assets | Retirement account balances as part of an estate plan |
| Artwork and collectibles | A valuable painting or rare collectible |
| Life insurance policies | Transferring ownership of a paid-up policy |
Join the Movement
Let’s make philanthropy work the way you and your clients want it to. Supporting over $200B in charitable assets, Ren is America’s premier provider of philanthropic technology and managed services.
