Tips for Choosing the Best Donor Advised Fund for Your Clients
Choosing the right Donor Advised Fund (DAF) that best suits your clients’ charitable interests requires careful thought. As a professional advisor, you are ideally situated to lead your clients down the path that best serves their financial and charitable goals.
Below are tips which will give you the insight needed to make your clients’ charitable giving as tax-smart, flexible and enjoyable as possible.
Tip #1 Affiliations
Is the organization that sponsors the DAF affiliated with another entity (for-profit or non-profit), or is it independent? How might these affiliations help or hinder the donor’s use of a fund now or in the future?
Tip #2 Contributions
What types of assets are eligible for contribution, e.g. cash, marketable securities, closely held securities, real estate and life insurance? In some cases, the best opportunity that the donor has to give is through the donation of illiquid assets. Is there a requirement that the contributed asset be immediately liquidated?
Tip #3 Investments
What investment choices are available? Are contributions pooled (meaning that the dollars donated are pooled with other donors for investment purposes?) Or can the dollars be separately managed in their own investment account? Can their financial advisor play an ongoing role in providing investment services for their DAF?
Tip #4 Grant Distributions
Are there restrictions on grant distributions, e.g. geographic, religious, etc.? Is there a minimum annual distribution requirement that the donor must give, or a maximum annual limit that restricts how much the donor wants to give away?
Tip #5 Succession
How flexible are the provisions for succession upon your client’s death? Is involvement limited to your client and their spouse? Or can the donor name other successive advisors such as children or other individuals of their choice?
Tip #6 Online Access and Personal Service
Does the sponsor offer the ease of secure online access to your client’s account? Does the sponsor offer access to a staff member who will personally work with them to the degree they choose and who will answer their questions whenever they arise?
Tip #7 Costs
Is there a set-up fee or termination fee? What is the annual administrative fee? Are there hidden fees in the fine print, such as minimum account level charges? Does the organization require a certain portion of the fund to be set aside for its own purposes? Most importantly, will they allow your client to transfer the fund in the future to another DAF sponsor, or are your funds held permanently by the initial sponsor?
The St. Louis Community Foundation is an independent, non-commercial organization created by and for the people in the St. Louis area and could be the best sponsor of your clients’ DAFs.
Interested in learning more about DAFs or opening a fund?
Contact Katie Knapp, Giving Strategist: email@example.com | 314.800.4590