by Ken Nopar, Senior Philanthropic Advisor, AEF

AEF donors again established many donor advised fund (DAF) accounts during 2018. The number of new accounts opened increased 42%, donations to new and established accounts increased 84%, and grants to charities increased 45%. Unlike the year before when much of the activity was at the end of the year, it was spread out throughout 2018. Thank you both from AEF and the charities you support!

Charitable Dollars GrowingEstablishing and funding your donor advised fund account is just one step. For many of our donors, the next step is to determine what to do next. Creating a DAF account and giving plan often enables our donors to feel a greater sense of pride, satisfaction, and accomplishment with their charitable giving both now and in the future.

Therefore, it may be very helpful for those of you with new DAF accounts, as well as those of you have previously established one, to do the following:

  1. Determine the goals of your charitable giving and develop a mission statement or statement of purpose.
  2. Discuss whether you want to support many different causes and charities or just a small number.
  3. Contemplate why charitable giving is important to you and whether leaving a charitable legacy is relevant.
  4. Decide who will be involved now in the charitable giving process, and at what point children or other family members should become involved. See if it makes sense to give children a certain amount to grant from the account this year.
  5. Clarify whether the DAF account should be for a limited time basis or should continue for many years or generations after your death.
  6. Discuss who the successor-advisor(s) should be to the account if it is to continue, and perhaps at what age any younger children should be named the successor-advisors.
  7. Determine how much you want to grant to various charities from your DAF account and whether you want to schedule repeated grants in advance.
  8. Evaluate how much you should contribute to your donor advised fund account every year and in the future. Identify additional assets that could be donated in the future and whether illiquid assets like privately-held company stock, farmland, vacation or primary home, other real estate, or insurance should be considered. Talk with your financial advisor and accountant to determine what’s most appropriate.
  9. Discuss with your financial advisor how the assets in your donor advised fund account should be invested.
  10. Discuss whether you want to meet with the leadership of the charities you support, conduct a site visit, volunteer, and decide how to evaluate whether you want to continue to support these organizations in the future. We encourage donors to be sensitive to the demands upon the organizations’ staff if their grants are not significant.
  11. Determine in which situations you want to give publicly or anonymously from your DAF account.
  12. Consider how formal a process you wish to utilize when determining where to give and who will be involved, and discuss whether you want to make your grants at different times of the year or just at one time. Since charities need support throughout the year, most AEF donors do not wait until December.

There is excellent information available for our donors under the Education and Resources section on the Donor page of the AEF website. Some of the topics include how to develop a mission, how to involve your family, and how to evaluate charities. Some of the leading charitable experts in the country have provided this content for AEF donors.

Occasionally, our donors may need the input or guidance of a philanthropic advisory firm to help them with some of the above items. These independent firms do not provide financial, legal, or tax advice, and often work with donors who are beginning their charitable journey or with those who need or want to change direction. Please refer to our Philanthropic Advisory Firm Referral Program for additional information.

Thank you for selecting AEF to be the donor advised fund sponsor of your giving account. We hope that your decision will enable you to achieve all of your charitable goals. Please contact us if we can be of additional help.