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Resources created and curated to support the growth of impact investing, for those new to the field and for experienced practitioners.

7 Tax Benefits of the Giving Fund

As you do tax and estate planning with your Tax Advisor, it is important to discuss the role of charitable giving. Consider that taxpayers benefitted from $21 billion of estate tax charitable deductions in 2017.[1]  This makes donor advised funds such as ImpactAssets’ Giving Fund highly useful for maximizing charitable tax benefits while providing flexibility for giving needs.

1. Control over timing of tax deduction

The Giving Fund allows you to decouple the timing of the tax deduction from the distribution of donations to your favorite charities. For example, if you donate assets in 2019, you will receive an immediate tax deduction for 2019, but can specify which charities the funds should go to for years to come. This makes a Giving Fund useful for situations such as:

  • A family that has significant income in a particular year (i.e. sale of business or large severance package) and wants to offset that to reduce their tax liability.
  • Private Foundations, Trusts, or Estates facing legal deadlines for distributing assets.

Bunching Donations:
The 2017 Tax Cuts and Jobs Act doubled the standard deduction for charitable donations from roughly $12,000 to $24,000 for a married couple filing jointly. This has made donor advised funds even more popular as charitable giving vehicle for donors who want to continue to maximize their charitable tax savings by itemizing deductions. With control of the timing of your tax deduction, you can bunch multiple years of charitable contributions into one year to meet the new itemized deduction minimum, and designate grants over time as you would have before the new tax law was in place.

2. Flexibility in types of assets donated

The Giving Fund offers you flexibility in donating assets that other charities may not be able to accept, such as appreciated stock, personal property, real estate, and non-publicly traded securities. For example:

  • A individual makes significant gains in the stock market and wants to donate their appreciated assets to charity.
  • A family wants to donate real estate, but wants the proceeds to support multiple charities. The Giving Fund team can administer this process, handling the sale of donated real estate and the proper placement (and reporting) of disbursements to your charitable causes.

3. Offset Capital Gains Tax

If you have made significant financial gains from appreciated stock or another financial windfall, giving directly to a donor advised fund is one of the most efficient ways to offset your capital gains tax. You receive an income tax deduction for the full market value of the stock at the time of the donation. By avoiding a capital gains tax you'll also have more money available to donate to the causes you care about. Learn more about Donating Appreciated Stock.

4. Tax-free growth

The donated assets you hold in a Giving Fund account are invested through our 100% Impact Investing Platform while we await your grant recommendations. We offer a variety of impact investment options, including turn-key impact portfolios, socially and environmentally screened mutual funds and ETFs, private debt and equity impact funds and custom investments. Any asset appreciation or investment income is tax-free, offering the potential for greater charitable impact than assets invested in taxable accounts.

5. Easy record keeping

Record keeping is simplified through the Giving Fund. You receive one tax receipt from ImpactAssets no matter how many grants you recommend throughout the year. The only tax receipt you will need for filing is for any contributions you have made to your Giving Fund.

6. Creating a simple but enduring legacy

The most important part of estate planning is ensuring that your legacy endures. Giving Funds can be left to heirs, allowing them to make grant recommendations in your honor without the burden of administrative work usually required for setting up and running a family foundation. All administrative work for the Giving Fund is taken care of by our staff, so that heirs can simply make grant recommendations to support the charities and causes that they and their loved ones cared most about.

7. High deductibility limits

The following chart provides a brief comparison of deductibility limits on contributions to the Giving Fund versus private foundations. 

  Donor Advised Fund Private Foundation
Tax Deductions - Cash 60% of AGI/year 30% of AGI/year
Tax Deductions - Securities
& Real Properties
30% of AGI/year 20% of AGI/year
Grant Requirements 5% annually suggested 5% annually required
Excise Tax on Investment Income None Up to 2% of income
Anonymity Upon request Taxes - grants are public
Separate Tax Return Required None Yes - Form 990
Annual Administrative Costs .125%-1% (for the Giving Fund) Variable/high


Please note there are a number of factors to consider when assessing the tax implication of gifts to charity.  Individuals should consult with a tax specialist before making any charitable donations.
 

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Impact investments are investments made into organizations and funds that generate measurable social and environmental impact as well as financial returns.