Joshua Gideon is the Chief of Strategy for Knights of Columbus Charitable Fund. Joshua is responsible for developing and implementing a comprehensive strategic plan to grow the Knights of Columbus Charitable Fund and maximize philanthropic impact. His passion is helping people explore the personal benefits (spiritual and tax) of Biblical Generosity.

Tax Advantages of a Donor-Advised Fund

With the recent tax season, many families begin to evaluate how they can optimize their financial and tax strategies while still creating a meaningful legacy. Donor-advised funds (DAFs) are one tool that allows families to manage their giving and capitalize on the associated tax benefits.

In its simplest terms, a DAF enables your family to receive an immediate tax deduction in the year you contribute to your fund, then decide later what charities your family wants to support. This can allow you to be more strategic and intentional with your giving.

Additionally, DAFs enable your family to donate appreciated assets such as stocks or real estate to your favorite causes while avoiding capital gains tax. You’ll receive both a deduction for the fair market value of the assets and avoid recognition of capital gain income that would have been required if the non-cash assets were sold instead of donated.

DAFs can also help play a crucial role in your estate planning. You can move assets from your taxable state into your DAF and designate a successor advisor to continue your charitable legacy in the future.

Finally, though we aren’t certain what will happen with taxes this year, if you currently take the standard deduction but are close to going over, you could “bunch” several years of giving into one year by contributing to your DAF, thus allowing you to itemize on your taxes next year and then take the standard deduction in future years. This may not be a solution for every family if you are already itemizing or have in recent years. Additionally, because the Tax Cuts and Jobs Act (TCJA) significantly increased the standard deduction for 2018 to 2025, fewer taxpayers have been itemizing deductions, claiming the standard deduction instead. With much of the Tax Cuts and Jobs Act (TCJA) set to expire in 2025 and other potential legislation from the new administration, evaluating planning opportunities will be even more important.

Grow Your Charitable Dollars and Reduce Your Tax Burden

Charitable giving can reduce income taxes in situations like selling your business or receiving a bonus and estate taxes at your death. Plus, after your contribution is made, you can recommend investment strategies for Charitable Fund assets without creating tax liabilities on any future growth.

Learn more about The Charitable Fund

Bundling Strategy

By bundling two or more years of charitable giving into a single tax year in a Charitable Fund, you may be able to increase your itemized deductions in one year and utilize the standard deduction in other years, which could save taxes and time depending on your circumstances.

Learn more about Bundling Strategies

Contribute Appreciated Assets to Reduce or Eliminate Capital Gains

Gifts of appreciated assets can have a double tax benefit when you donate them directly to your Charitable Fund, avoiding capital gains tax in addition to receiving an income tax deduction. Then, grant the funds out in cash that your favorite organizations can easily process.

Learn more about Appreciated Assets

START YOUR JOURNEY

Our team shares your values and understand that every charitable situation is unique. We are here to provide answers to your questions regarding The Charitable Fund or walk you through getting started with an account.

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