Donor-advised funds – An efficient charitable giving strategy

One of the simplest and most tax-advantageous ways to give is through a donor-advised fund (DAF), which is the fastest-growing charitable giving vehicle in the U.S.

You can contribute appreciated stocks and other securities directly to the DAF, rather than selling the securities first, paying capital gains taxes, and then contributing the proceeds.

When you fund a DAF with low-cost basis stock you get a double tax break: A full upfront tax deduction of the value of the gift, and you do not pay capital gains taxes on the appreciation. The assets in your DAF also have the potential to grow tax-free over time.

Giving with stocks and other securities to a DAF instead of directly to a charity will make it easier to spread your gifts to more charities over a longer time period. You can make your contribution now, then have unlimited amount of time to decide which charities to support. Think of it as your personal “charitable checking account” from which you can make donations to causes you care about for years to come.