Explore smart charitable giving options for your year-end plan


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If 2017 has been a successful year for your portfolio, generosity may be on your mind as the holiday season approaches and you think about how to share your good fortune with the causes you care about.

This is an opportune time to explore the benefits of contributing to a donor advised fund (DAF). Portfolio gains during the previous 12 months may mean year-end tax planning is especially important between now and Dec. 31. A DAF may offer you important tax advantages – as well as greater control over your charitable giving.

What is a DAF?

A DAF is often used by donors who wish to maximize their current income tax deductions. It is a gifting vehicle created by a “parent organization” such as a community foundation or another qualified 510(c)(3) non-profit organization. The parent organization provides a document (often at no charge) in exchange for an irrevocable relationship. While you may choose what charity to support, you have few responsibilities beyond donating funds and suggesting how they be used.

Tax advantages

Your cash contributions can be deducted up to 50 percent of your adjusted gross income (AGI). If you donate appreciated securities, such as stocks, you can usually deduct up to 30 percent of your AGI. And you are not limited to a “onetime” donation — one of the key benefits of a DAF is it allows you to make additional contributions from year to year, which can help you generate additional income tax deductions.

Maintain control

Throughout your lifetime the DAF allows you, or your designee, to make ongoing, non-binding recommendations to the fund regarding how much, when, and to which charities, grants from the fund should be made. You or your designee can also offer advice to the fund as to how contributions should be invested.

If you are looking for a method of providing long-lasting contributions to charitable organizations through a tax-advantaged solution, take a close look at donor advised funds.

To learn more about donor advised funds, please contact your RBC Wealth Management® financial advisor. Or use the advisor locator tool to find a financial advisor near you.

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