Kristen Beall Barnes

Kristen Beall Barnes

The Rockefellers. The Waltons. The Gates. The Fords. These are the well-known families that left a legacy through the empires they built. But they also left a lasting legacy through the many causes and organizations that still thrive today due to their decades of philanthropy.

Many funded their philanthropic endeavors by establishing private family foundations. And while private charities remain a popular option, a growing number of individuals, families and even businesses are turning to a more do-it-yourself option – donor-advised funds – to create a lasting legacy.

DAFs are emerging as a more affordable and easier-to-establish option for donors who want to give back over time but don’t want to invest the time or money that private foundations require. They are like charitable savings account. Donors can make contributions to their fund, receive an immediate tax deduction and make grants to their favorite charities over time.

What makes a DAF so popular? Perhaps it’s due in large part to the flexibility it offers and the ease with which a donor can establish a fund. A DAF may be opened today and donors can begin making grants from it tomorrow. To establish a DAF, the donor works with a “parent organization,” such as a Kern Community Foundation, that essentially acts as the administrator of the fund over its lifetime.

We handle the setup, the accounting, the vetting of the nonprofit organizations to which donors wish to recommend their grants and, if the donor so chooses, the investment management of the assets. But administration isn’t our only role. We often help donors articulate their charitable goals and then realize those goals by supporting organizations that serve that purpose and align to their core values. DAFs allow donors to use specialized grant agreements, recurring grants and anonymous grants to help reach their charitable giving goals. Many donors think of Kern Community Foundation as their personal philanthropic adviser.

There are no startup costs or minimum balances associated with establishing a DAF at Kern Community Foundation, however, an annual administration fee is charged based on a percentage of assets held. While cash is the typical asset donors use to establish DAFs, contributions of appreciated securities, real estate and other illiquid assets are also accepted and often produce favorable tax consequences. Assets that have been held more than one year may be donated at their fair-market value, which means no capital gains tax.

Keep in mind that the charitable dollars in a DAF may be invested and grow tax-free, increasing the money available for granting. Additional contributions can be made over time not just by the original donor, but by anyone who chooses to donate to the fund. Those contributions may also qualify for a charitable income tax deduction.

Donors may also solidify their charitable giving legacy by appointing successors or charitable beneficiaries to manage the DAF and recommend grants after the donor’s lifetime. In short, DAFs offer an easy and low-cost way to create a lasting legacy for you, your family or your business.

To learn more contact Kern Community Foundation.

Kristen Beall Barnes, Ed.D., is the president and CEO at Kern Community Foundation. Contact her at Kristen@kernfoundation.org or 616-2601. The views expressed in this column are her own.

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