“But can’t I go to jail for that?” you ask.
No! It’s perfectly legal, it’s not complicated, and it can come in handy before tax time, too.
- Imagine it’s year-end and you need a charitable deduction. There are so many charities you love, but you’re not sure which ones you want to support and how much to give. And time is running out for that deduction. Yikes, it’s Dec. 24th, and Christmas shopping has kept you distracted. What kind of donation can you get done by Dec. 31?
- Or, let’s say it’s June and you have plenty of time to decide which charities to support. But you don’t have time to think about it right now — two of your kids are graduating.
- And finally, you actually want to make a larger gift and get a deduction now, but you just can’t afford it right now.
There Is a Solution
You can make a “strange contribution” to a certain kind of fund today that keeps your contribution in limbo. You get your deduction, but it seems like no favorite charity receives your funds … yet. But don’t worry, your money is safe and available to be distributed to a charity whenever you are ready.
The best thing? This fund (that contains your “strange contribution”) is professionally managed, so it will likely grow over time — enabling you to make that larger gift you always wanted, maybe even next year. And if your kids are getting married, the year after next. But don’t wait for that magic moment, because charities need your help now for long-term growth.
What’s this “Strange Contribution”?
The fund is called a Donor Advised Fund (DAF) which we clearly outline on our client planned giving websites in a very donor-focused way. Don’t let the name scare you. It is a very simple concept. Think of it as a mutual fund: You’re “buying into a donation pool” where your money stays and is professionally managed (along with donations from others). And as your fund grows over time, you can decide when and how much to disburse to the charities you love.