Simplify Giving, Create Your Legacy

Tags: Federation, PR, legacy

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Article reprinted with permission from the Cleveland Jewish News.


Carol Wolf

Carol Wolf

The Cleveland Jewish community is one of the most generous in the United States and most of us give because we believe in the missions of the charitable organizations to which we donate.

But this year, with the substantial increase in the standard deduction, we will be tested. If our reasons for donating are purely altruistic, our charitable giving will remain the same as before. But, even if tax deductions are not our No. 1 motivation, most people do enjoy the tax savings that may accompany the donation. That is something to think about as the year progresses.

In this changing and sometimes confusing environment, donor advised funds can significantly simplify your charitable giving. Depending on your situation and the amount you donate to your fund, it may increase tax savings by enabling you to itemize deductions to a level in excess of the increased standard deduction. As you simplify your current giving, you create a mechanism that can also simplify creating lasting legacy.

Here’s how it works: you make a donation of securities, cash or other assets to create the fund (many institutions offer donor advised funds, including the Jewish Federation of Cleveland, Cleveland Foundation and several financial institutions) retaining the privilege to recommend grants in the future.

A donor advised fund allows you to “bundle” donations in one year, or donate much more than you will donate for that particular year. This helps you reach a level at which you can itemize deductions. For the next year or more, you may choose to take the increased standard deduction until you choose to “bunch” again. You have made one donation that is tax deductible and then may recommend many grants to the charities of your choice. Simple.

Donor advised funds also simplify the process of due diligence. The institution hosting the fund verifies the tax status of the various charities to confirm their legitimacy. Grant recommendations are simple with online tools, and statements and balances are accessible at all times. This allows you to have a wonderful and accurate record of the charities you have supported for the current year as well as your grant-making history. An added benefit is the assets of the fund are invested and the earned income is not taxable, allowing you, as the donor adviser, to donate to charity.

As mentioned above, a donor advised fund may also be a valuable tool in creating a philanthropic estate plan. In addition to recommending grants during your lifetime, you may leave instructions recommending grants from the remaining fund assets upon your death. These grants may create permanent endowment funds in your name and support what you care about most for future generations. Some donor advised fund programs offer the option to name successor advisers for the fund, allowing your family’s next generation to continue your history of philanthropy.

Discuss your options with your own financial advisors. Donor advised funds are simple, efficient, may offer tax benefits and provide a mechanism to create a meaningful legacy. In a world that is so complicated, it’s something to consider.

Carol F. Wolf is the managing director of planned giving and endowments at the Jewish Federation of Cleveland. She can be reached at cwolf@jcfcleve.org or 216-593-2805.

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Learn More: Federation, PR, legacy