Philanthropy; the desire to promote the welfare of others, expressed especially by the generous donation of money to good causes.
There are many ways to practice philanthropy even if you aren’t wealthy. It might be a donation of your last dime or your free time for a good cause that could make the difference in someone’s life.
But, for those with a little bit more disposable income, there’s something that’s becoming increasingly popular. It’s called Donor Advised Funds.
- What is a Donor Advised Fund and how can I make the most of it?
Donor Advised Funds are charitable giving tools which allow you to make use of tax perks but delay the disbursements until later.
The funds are managed by non-profit entities, the money grows tax free while it is in the fund, but like most things, there are some administrative fees involved. However, the more money in the fund, the less fees you will have to pay. These funds are beneficial to those who donate assets other than cash, as you are able to avoid capital gains tax on these assets by donating to them to the fund.
Donor Advised Funds are being pitched as tax management vehicles which allow you to exploit your tax deductions during boom times, and then donate the money after. The funds also offer options for donors who want to remain anonymous.
Philanthropy or, more specifically, Donor Advised Funds work best for those who donate large amounts regularly, rather than one-off gifts. It is seen as a way to grow the fund being donated while maximizing the use of this money.
There are some things that need to be kept in mind if you do wish to pursue this route:
- A large amount is required to initially set up the fund (approx. $5,000)
- Some restrictions apply to follow-on donations and grant size
- You don’t always have full control of the fund
- How does this all relate to philanthropy?
Philanthropy goes back to as early as 347 B.C, when Plato left his farm with clear instruction that the proceeds should be used to support the students at the academy he founded. Throughout history we have witnessed the power of charitable giving.
The benefits of giving are endless; from the practical aids that will support those in need, to your own emotional satisfaction of donating, philanthropy is something we all should consider. If you prefer to use a tool such as a Donor Advised Fund, or prefer small donations to specific causes, you are still helping others. Regardless of the amount, it is important to promote the welfare of others, especially those who are less fortunate.