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I believe we all have a duty to leave this world a better place than we found it and therefore we have an obligation to help those less fortunate than us.  However, my experience has been that the more we donate to those great causes, the more solicitations and phone calls we get.  Some are great causes, some are not, but the reality is that many charities sell or share their donor list with other charities.  Unfortunately, the end result is usually a mailbox full of solicitations for donations along with a phone that constantly rings with solicitations.


The best solution I’ve found to what I call “solicitation harassment” is the donor advised fund.  So what is a donor advised fund?  In the simplest form, you work with an organization that is set up simply to accept your charitable contributions and send them to the causes you designate.


Advantages to donor advised funds:

  1. You can give more in good years and less in bad years but still have your donor pool to offer consistent dollars to your charitable causes.  Charities receive a consistent flow of funds to continue in existence.
  2. My experience is that most people give to charity not to receive recognition, but more as a duty to share their wealth with those less fortunate.  Therefore, I suggest you tell your donor advised fund to make the donations to the causes you support as anonymous donations.  This keeps your name from getting on literally 100s of mailing lists.
  3. The money you have not yet given can be invested by the fund manager so you can make some earnings that are tax free and allow you to make more contributions in the future.
  4. If you have some stock or investments that you have a low cost in, you can donate that stock to your donor advised fund and take a charitable deduction on your personal tax return for the fair market value of the stock.  If you sold the stock you would pay tax on the gain and then have fewer dollars to contribute to the charity.  This allows the donor to get rid of gain in a stock portfolio by donating large gain stock and then using the cash they would have donated to the charity to buy the stock back at the current cost with no gain.   Then later if you need to sell that stock there is a much lower tax on the sale.


Disadvantages of donor advised funds:

  1. The donor advised fund is a tax qualified charity so you deduct the contribution when you make it to the fund.  However, the tax law has special rules and does not allow you to use your required minimum distributions from retirement accounts as qualified charitable contributions directly from your retirement account.
  2. There is a lower limit on how much of your income you can donate to a donor advised fund.  Contributions to these funds are limited to 30% of your adjusted gross income.  Any excess contributions are carried over to future years for a maximum of 5 years so large contributions in any one year require some planning.


In summary, my opinion is the advantages of donor advised funds far exceed the disadvantages.  If you want to look further into these funds, just do a google search of donor advised funds.  You may also want to search for community foundations in your area. Those foundations offer donor advised funds and often make it easier to talk with a real person you can work with every day as compared to a national firm.



Bert Doerhoff, CPA