Giving Something Back

Establish a family traditon of giving for years to come.

One of the most rewarding features of the service we offer to our clients is helping them return some of their good fortune to their communities in the form of charitable giving. There are a surprising number of little-known financial planning tools that can help with philanthropic activities—and serve the bottom line as well.

The Donor Advised Fund (DAF) is one of these strategies. The DAF allows you to donate as little as $10,000 a year to a foundation or public charity for an immediate tax write-off, but to defer the distribution of the money for several years. And depending on how you set up your fund, you and your wealth manager can take advantage of a number of investment options, to keep your money growing as it’s helping others.

One of the headaches of charitable giving is the end-of-the-year rush, when we feel like it’s time to make contributions—both for the welfare of others and for our own tax situation—although we haven’t the time to sort through the many deserving recipients. DAFs sidestep that problem while also helping you establish a family tradition of giving for years to come.

A Helpful Tool

A DAF is similar to setting up your own private foundation, but much simpler.

Donor Advised Funds are run either by nonprofit organizations, by mutual fund companies, or by independent organizations like the American Endowment Foundation. A DAF is similar to setting up your own private foundation, with much less hassle and paperwork on your part. As the donor, you choose the organizations to which your money will go, although the establishing foundation does retain final approval, particularly since it must ensure that the recipient is a legitimate nonprofit.

Once the money is put into the DAF, it can be invested any number of ways, though this will differ from fund to fund. Fidelity’s donor fund, for example, allows you to invest in any of that firm’s 2,000 offerings. So, you can have your wealth manager target your investments, looking after their security, while you wait to make your donations. On the other hand, the National Philanthropic Trust, a charitable institution set up solely to offer such opportunities for giving, offers only three streams for its donations. But if you invest your DAF with a nonprofit, you are allowed to act as an advisor to the charity.

Once you’ve set up and funded your DAF, you can take the tax deduction immediately, although you won’t get any subsequent tax advantages when the funds are distributed. You can, however, make additional tax-deductible contributions for smaller amounts than the initial funding. In addition to cash, you can fund your DAF with securities, which allows you to avoid capital gains taxes on any appreciation.

Doing Well By Doing Good

Donor Advised Funds can become a rewarding part of your portfolio.

When something simplifies your life without crowding out your options, it’s worth looking at, and that’s exactly what these Donor Advised Funds do. Your philanthropic giving can fit better, both into your financial planning agenda and into your schedule for making contributions. With an experienced wealth manager at your side to help choose the proper investment options for your vehicle, Donor Advised Funds can become a rewarding part of your portfolio, in more ways than one.

At Bernhardt Wealth Management, we can help you use your wealth to contribute to the community in ways that are highly beneficial to you as well. It’s part of our holistic approach to wealth management, one that takes into consideration all aspects of your financial desires and well-being.

To learn more about what we can do for you, contact Bernhardt Wealth Management at or give us a call at (703) 356-4380. You can also email me directly at

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