The economic conditions of 2023 have proven to be anything but steady. Market swings, inflation, and challenges in the banking sector are causing donors to be more financially conservative and to evaluate whether to keep their charitable giving at the levels of years past.
However, the need for charitable giving has not changed. Philanthropic support for the nonprofit sector is critical to improving the quality of life in our region. This is especially true as the number of households giving to charity has declined by more than 16% over the last three years.
The good news is even in a rocky economy, Austin Community Foundation can help maintain and increase your giving to support the causes you care about most. Recently, we’ve seen a rise in fundholders contributing stock to their donor advised funds (DAFs). Giving appreciated, publicly traded stock to charitable organizations is a highly effective strategy in any economy. This article explores the key advantages of giving stock to a DAF managed by the Foundation.
- It’s a win-win. For the donor, giving appreciated stock provides a means to contribute to causes they care about while enjoying significant tax benefits. Simultaneously, valuable assets are invested in the DAF that can grow over time, generating more funds to support charitable causes at any time.
- Diverse acceptance of assets. One of the benefits of a DAF is its flexibility in accepting various types of assets. Apart from appreciated stocks, donors can contribute bonds, mutual funds, and exchange-traded funds. This versatility allows donors to contribute their preferred financial instruments, aligning their giving with their overall investment strategies and goals.
- Tax savings. Donors who contribute appreciated stock to a DAF enjoy two significant tax benefits. Firstly, they receive a tax deduction for the fair market value of the donated stock. This means that the donor can deduct the stock’s current value on their tax return, effectively reducing their taxable income. Secondly, donors avoid paying capital gains tax on the appreciated value by giving the stock directly to the DAF. This combination of tax savings translates to more funds available for charitable purposes.
- Ability to give on your schedule. A key benefit of using a DAF is determining the timing and beneficiaries of charitable grants. Donors can take their time to research and understand various organizations, ensuring that their contributions align with their values and philanthropic objectives. This flexibility empowers donors to make well-informed decisions and support causes that resonate with them throughout the years.
Have any questions? Please email us at heretohelp@austincf.org. Our team is always happy to discuss options best suited to help you achieve your philanthropic goals.