With a donor-advised fund, costs are minimal. Starting a donor-advised fund is free. You make your charitable donation of at least $300 to establish the fund, and the administrator charges a nominal annual fee, typically about 2%, to cover administration and investment fees – but only after you have received your full tax deduction for gifts to the fund.
The answer may be yes if you:
- Need to build your fund to the $5,000 minimum over time
- Want maximum flexibility
- Want to make a difference in your community
- Are looking for an easy way to give
- Are looking for tax-deductible opportunities
- Want to start a fund online
What is a Donor-Advised Starter Fund?
A starter fund is ideal for those who dream of making a difference in their community but may not have the minimum donation amount to give upfront. Like any donor-advised fund, the starter fund is a simplified, flexible and affordable option for beginning your strategic philanthropic journey. With a donor-advised starter fund, you can streamline your charitable giving while building your fund up over time so that you'll be able to financially support your favorite causes far into the future.
How Does It Work?
Just like with your retirement savings, saving for your charitable future now helps you make a bigger impact over time. With an initial $300 minimum donation (rather than the $5,000 donation for a traditional donor-advised fund), you can establish a donor-advised starter fund that can be built up to the $5,000 minimum balance requirement over a period of three years. You can have donations automatically deducted monthly, quarterly, semi-annually or annually – it's your decision. Once the fund has been fully invested at the $5,000 level, you have the ability to begin making grants to causes you care about if you wish. You can also continue to build your fund over time through tax-deductible contributions so that you'll have more to give away in the future.
Click the button below to see more information in our sample Donor-Advised Starter Fund Agreement.
Benefits of a Donor-Advised Fund
Donor-advised funds relieve you of all the work. The administrator handles all the due diligence, record keeping, check writing, gift acceptance and tax filings.
Donations to donor-advised funds are deductible up to 60% of adjusted gross income on gifts of cash, and 30% on gifts of appreciated assets like stock, mutual funds and real estate. Deduction limits on gifts to private foundations are 30% and 20%, respectively. Donating long-term appreciated assets to a donor-advised fund may even eliminate capital gains taxes.
Donor-advised funds give you time to plan and be strategic about your charitable giving. Establish or donate to your fund when it makes the most tax sense, then distribute grants from the fund when the right charity or project comes along. In the meantime, your donor-advised fund's assets will be invested, with earnings growing tax-free.
Support as many charities as you wish through your donor-advised fund. For tax purposes, you only need to track your contributions to the fund. Are multiple members of your business or family conducting charitable giving? By consolidating everyone's charity in a donor-advised fund, you can minimize confusion and duplication.
While private foundation giving is public record, grants made through donor-advised funds can be made anonymously if you wish. You can also name your fund in such a way that fully protects you from funding appeals.
Donor-advised funds make a statement. You can name them for your family or company, or in honor of a co-worker or loved one. They are also an effective way to encourage philanthropy among your family or employees. You can involve your children, grandchildren and even future generations of family members in your grantmaking and name them as successor advisors. You can also endow your donor-advised fund so it will grow in perpetuity and later select a specific nonprofit or cause for your fund to permanently support upon your death.
Ways to Give
Akron Community Foundation can accept a variety of assets to establish your fund, and the best donation isn't always cash.
Cash gifts may be deducted up to 60% of adjusted gross income for income tax purposes. Contributions over that limit can be carried over for up to five years. Gifts can be made via cash, check or credit card.
You'll receive a double benefit if the stock has appreciated: an immediate charitable deduction for the fair market value of the securities donated and exemption from any capital gains tax on the appreciation.
By donating a portion of your privately held stock, you can receive a fair market value deduction for the contribution and avoid paying capital gains tax on illiquid assets that have greatly appreciated in value.
Many people find that the protection offered by life insurance is no longer needed later in life, making life insurance policies an ideal gift. If the policy is paid up, you will receive an immediate tax deduction for the policy's cash surrender value.
Gifts of real estate can include a house, apartment building, farm, vacation home, commercial building or land. Once accepted, Akron Community Foundation has a separate LLC set up to handle these types of gifts for you.
Some donors may prefer to give their automobile, antiques or jewelry. Akron Community Foundation can accept these more complex gifts, too, but most will require an appraisal by an impartial party.
WHO ARE WE? We are a 501(c)(3) public charity composed of more than 830 charitable funds begun by people just like you. Those funds, and the gifts that started them, bear the mark of many donors, not just a select few, which differentiates us from a private foundation.
In short, we're the foundation by the people, for the people. Learn more about community foundations.
The Benefits of Working with Us
- We're accessible online, by phone and in person
- We help you learn about local nonprofits
- Our administrative fees are low and stay in your community
- We're happy to work with your advisor
- We'll always be here, for you and future generations
- We offer many tax-smart ways to give