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Donor advised funds—what are they?

Feb 10, 2014

Donor advised funds might sound daunting to those unfamiliar with them, but the explanation is very simple. A donor advised fund allows individuals, families, clubs and districts to make grants for specific purposes that have personal meaning to them. The setup is also simple—make an irrevocable tax-deductible gift to our foundation and then recommend grant distribution. In essence, this is similar to setting up a foundation of your own, but this offers the alternative of avoiding excise tax, setup and staffing costs and other restrictions placed on private foundations. We have numerous donor advised funds at the Kiwanis International Foundation and they’re making an impact in children’s lives around the world.

Donor advised funds enable you to not only ensure your charitable aspirations are fulfilled, they also have many other benefits:

  • Ability to accept and process appreciated securities for which the donor does not have to pay capital gains tax.

  • Capacity to receive one block of securities that can benefit multiple charities.

  • Creation of a legacy versus providing a one-time gift.

  • Separation of tax planning and charitable giving, donor receives tax deduction when contribution is made, but grants to charity can be made later.

  • Simplicity, a single contribution can benefit multiple charities while only requiring one tax substantiation letter.

The Kiwanis International Foundation encourages you to explore the option of setting up a donor advised fund. Some district foundations provide this service as well. It’s a superb example of how we can make a substantially greater impact together than we could alone. By working together, we can work to extend your Kiwanis impact around the world.