With the passage of the Tax Cuts and Jobs Act on December 22, 2017, donor-advised funds have become a far more important vehicle to help charitably-minded, tax-conscious individuals and families benefit from charitable donations.
In prior years, you may have enjoyed a charitable tax deduction, along with other itemized deductions, but under the new tax law, with a giant increase in the standard deduction, it will be much harder for most people to realize that same tax benefit. However, a donor-advised fund may be the tool you need to continue to maintain your charitable giving while also maximizing your tax savings.
What is a donor-advised fund and how does it help reduce taxes?
A donor-advised fund is an easy, tax-efficient way to contribute to your favorite charities (while minimizing your taxes). Anyone can open a fund with an initial contribution of $5,000 or more, after which the fund can be professionally managed and invested for future growth. Once a donor-advised fund has been established, the donor can make contributions to charities out of the fund’s assets at any time.