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3 Tax Benefits of Donor Advised Funds

One of the joys of managing our money well is that we are then able to give to those in need. That’s why we love donor-advised funds! Where financial advising and charitable giving meet, donor-advised funds are a great way to give back, while also receiving tax benefits. The contributions you make to a donor-advised fund are tax-deductible, grow tax-free, and allow you to support the causes and organizations that you feel passionately about. To illustrate how these funds can help reach your financial goals, here are three benefits of donor-advised funds.

What is a Donor Advised Fund (DAF)?

Think about a donor-advised fund as a charitable checking account. With a DAF, you can donate directly to your favorite charities in mere minutes. This is especially true when you have your fund set up online, as you can direct where your donation goes with just a few clicks. DAFs allow you to take an immediate tax deduction when making your investment (subject to income limitations). So, not only does a DAF provide you with an easy way to donate and keep track of your charitable giving, but it can also provide you with multiple tax benefits.

What Assets Can You Contribute to this Fund? 

You can contribute cash, cryptocurrency, stocks, bonds, mutual funds, restricted stock, life insurance, private S- and C-corp stocks, appreciated real estate, and more. The types of assets that your DAF accepts will vary depending on the fund’s owner.

3 Tax Benefits of Donor Advised Funds

1. Your Contributions Grow Tax-Free

When we give, we always want to give as much as possible to make the biggest difference possible. That’s what makes a DAF a great choice to maximize your donations. Because these assets belong to your fund’s charitable sponsor, once they go into your account, your contributions grow tax-free. 

2. Your Donations are Immediately Tax-Deductible

Subject to income limitations, you may be able to take an immediate tax deduction when you contribute to your DAF. For this reason, your advisor may recommend that you contribute to your DAF to offset your tax liability. This allows you to reduce the tax you owe if you were to receive a great deal of money at once, in an inheritance, for example. 

3. You Can Reduce Capital Gains

DAFs are often recommended because they can be a good way to reduce your capital gains taxes on appreciated assets. In certain circumstances, you can contribute an appreciated asset and deduct its current market value rather than what you originally paid. This makes DAF a commonly used tool in the financial planning toolkit. 

Make the Most Out of Your Charitable Giving

Southwestern Investment Group advisors strive to make charitable giving a priority for our clients. We know that your donations can make a difference in the world, while also providing you with tax advantages and adding to your long-term financial strategy. Want to make charitable giving part of your plan? Contact Southwestern Investment Group today to schedule a consultation with an advisor near you.

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Jeffrey T. Dobyns

CFP®, CLU, CHFC

President, SageSpring 

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Jeffrey T. Dobyns

President, SageSpring 

Beyond crunching numbers and investment strategies, at SageSpring, we’re about building relationships. When you encounter Founder & President of SageSpring, Jeff Dobyns, it’s easy to understand why this is at the very heart of who we are as a firm. You won’t find stuffy formalities with Jeff; instead, you can expect to find him sharing a warm smile, communicating a compelling vision, or patiently untangling life’s complex challenges with clients. He believes in truly getting to know clients, understanding their aspirations and priorities, and navigating their financial plans with a tailored, comprehensive approach. Our team members have often been caught taking notes on Jeff’s effortless relationship skills from a distance, and we admire them for striving to learn from one of the best. 

Jeff’s financial expertise and wisdom are the perfect match to his innate people skills. Jeff holds the prestigious CERTIFIED FINANCIAL PLANNERTM certification, Chartered Life Underwriter (CLU®), and Chartered Financial Consultant (ChLU®) designations, and has held executive positions with financial planning firms for more than two decades. 

His dedication extends beyond the office to the boardroom and the local community, where Jeff is passionate about giving back. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. Jeff actively supports other initiatives in the community by sitting on the board of The Signatry of Middle Tennessee and the Halftime Institute of Nashville. 

Witnessing his four children, Gracyn, Hunter, Tanner, and Logan, excel on the field is almost just as rewarding, if not more, than celebrating the victories of seeing his clients overcome obstacles and build wealth. Spending weekends boating on the lake, hiking mountain trails, and fishing with his family are the moments Jeff cherishes most. It’s this grounded perspective that reveals the true meaning of wealth for Jeff: not just numbers on a page, but the freedom to create experiences that enrich your life and the lives of those you love. When you choose the Dobyns McMillin Wealth Team, you choose more than financial expertise. You choose a partner who champions your dreams, celebrates your victories, and walks besides you on the path to achieving your unique goals.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER TM, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.