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You would consider entering into a partnership with your favorite charity in order to make a significant gift > You currently make outright gifts to it and to other charities > You want to stay involved in the work of the charities you benefit > You have confidence in the investment management of your charity's endowment fund

Some Kansas City charities will help you set up a gift account for making regular charitable distributions both to them and to other charities. Operating somewhat like a private foundation, a Donor Advised Fund (DAF) gives you the security of skilled financial management and the flexibility and control of guiding your gifts to the charities of your choice.

Donor Advised Funds operate as part of the endowment of the host charity, so you have the security of professional management and the opportunity to take advantage of their investment opportunities. The grantmaking procedure is simple, and your DAF offers you complete deductibility of the contributions you make to it plus full documentation on all distributions it makes on your behalf.

In addition, because you can involve your family in deciding which charities your DAF will benefit, you may find that this is a great way to instill and nurture philanthropic values.

How a Donor Advised Fund Works

The library, the zoo, your religious organization... the host charity of your donor advised fund can help you support them all.

You make a minimum initial gift, usually $100,000 to $250,000, to establish a Donor Advised Fund. Additional contributions to the fund can be made at any time. The gift becomes the property of the host charity, and is managed as part of its endowment fund. Each year, a percentage of the value of the DAF, determined by the host charity's endowment spending formula, is available for grants. You or your advisor may recommend the recipients of grants to be made from this distribution account.

The host charity reviews your suggestions, and, if it approves them, makes distributions to the charities you have nominated, identifying the grants as coming from your DAF. (Placing this grantmaking authority in the hands of the charity ensures that your gift establishing the DAF is complete in the eyes of the IRS and therefore deductible.)

Making Grants

While you, or your designee, recommend the recipients for annual grants, a minimum percentage of the annual grants from your DAF must be distributed to the host charity. Similarly, upon termination of your DAF, a percentage of the assets remaining in the fund will be distributed to the host. Unlike a private foundation, annual distributions from the DAF are not required.

Host charities will not approve a suggested grant from your DAF that would benefit you or your designee, go to a private foundation, support political activities, or be used for any purpose which is not wholly charitable or consistent with their mission.

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